tag:blogger.com,1999:blog-72885106344607872162024-03-20T23:03:04.055-07:00USSenator20080101Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.comBlogger964125tag:blogger.com,1999:blog-7288510634460787216.post-73937990854088172192009-12-13T11:50:00.000-08:002009-12-13T11:52:57.880-08:00Obama's Big SelloutOriginal Link: <a href="http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/">http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/</a><br /><br />By MATT TAIBBI<br /><br />The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway<br /><br />Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.<br /><br />Then he got elected.<br /><br />What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.<br /><br />How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we've been seeing on TV this fall who Obama really is?<br /><br />Whatever the president's real motives are, the extensive series of loophole-rich financial "reforms" that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street's political power by institutionalizing the taxpayer's role as a welfare provider for the financial-services industry. At one point in the debate, Obama's top economic advisers demanded the power to award future bailouts without even going to Congress for approval — and without providing taxpayers a single dime in equity on the deals.<br /><br />How did we get here? It started just moments after the election — and almost nobody noticed.<br /><br />'Just look at the timeline of the Citigroup deal," says one leading Democratic consultant. "Just look at it. It's fucking amazing. Amazing! And nobody said a thing about it."<br /><br />Barack Obama was still just the president-elect when it happened, but the revolting and inexcusable $306 billion bailout that Citigroup received was the first major act of his presidency. In order to grasp the full horror of what took place, however, one needs to go back a few weeks before the actual bailout — to November 5th, 2008, the day after Obama's election.<br /><br />That was the day the jubilant Obama campaign announced its transition team. Though many of the names were familiar — former Bill Clinton chief of staff John Podesta, long-time Obama confidante Valerie Jarrett — the list was most notable for who was not on it, especially on the economic side. Austan Goolsbee, a University of Chicago economist who had served as one of Obama's chief advisers during the campaign, didn't make the cut. Neither did Karen Kornbluh, who had served as Obama's policy director and was instrumental in crafting the Democratic Party's platform. Both had emphasized populist themes during the campaign: Kornbluh was known for pushing Democrats to focus on the plight of the poor and middle class, while Goolsbee was an aggressive critic of Wall Street, declaring that AIG executives should receive "a Nobel Prize — for evil."<br /><br />But come November 5th, both were banished from Obama's inner circle — and replaced with a group of Wall Street bankers. Leading the search for the president's new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama's biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin, the former co-chairman of Goldman Sachs who served as Treasury secretary under Bill Clinton. Froman had served as chief of staff to Rubin at Treasury, and had followed his boss when Rubin left the Clinton administration to serve as a senior counselor to Citigroup (a massive new financial conglomerate created by deregulatory moves pushed through by Rubin himself).<br /><br />Incredibly, Froman did not resign from the bank when he went to work for Obama: He remained in the employ of Citigroup for two more months, even as he helped appoint the very people who would shape the future of his own firm. And to help him pick Obama's economic team, Froman brought in none other than Jamie Rubin who happens to be Bob Rubin's son. At the time, Jamie's dad was still earning roughly $15 million a year working for Citigroup, which was in the midst of a collapse brought on in part because Rubin had pushed the bank to invest heavily in mortgage-backed CDOs and other risky instruments.<br /><br />Now here's where it gets really interesting. It's three weeks after the election. You have a lame-duck president in George W. Bush — still nominally in charge, but in reality already halfway to the golf-and-O'Doul's portion of his career and more than happy to vacate the scene. Left to deal with the still-reeling economy are lame-duck Treasury Secretary Henry Paulson, a former head of Goldman Sachs, and New York Fed chief Timothy Geithner, who served under Bob Rubin in the Clinton White House. Running Obama's economic team are a still-employed Citigroup executive and the son of another Citigroup executive, who himself joined Obama's transition team that same month.<br /><br />So on November 23rd, 2008, a deal is announced in which the government will bail out Rubin's messes at Citigroup with a massive buffet of taxpayer-funded cash and guarantees. It is a terrible deal for the government, almost universally panned by all serious economists, an outrage to anyone who pays taxes. Under the deal, the bank gets $20 billion in cash, on top of the $25 billion it had already received just weeks before as part of the Troubled Asset Relief Program. But that's just the appetizer. The government also agrees to charge taxpayers for up to $277 billion in losses on troubled Citi assets, many of them those toxic CDOs that Rubin had pushed Citi to invest in. No Citi executives are replaced, and few restrictions are placed on their compensation. It's the sweetheart deal of the century, putting generations of working-stiff taxpayers on the hook to pay off Bob Rubin's fuck-up-rich tenure at Citi. "If you had any doubts at all about the primacy of Wall Street over Main Street," former labor secretary Robert Reich declares when the bailout is announced, "your doubts should be laid to rest."<br /><br />It is bad enough that one of Bob Rubin's former protégés from the Clinton years, the New York Fed chief Geithner, is intimately involved in the negotiations, which unsurprisingly leave the Federal Reserve massively exposed to future Citi losses. But the real stunner comes only hours after the bailout deal is struck, when the Obama transition team makes a cheerful announcement: Timothy Geithner is going to be Barack Obama's Treasury secretary!<br /><br />Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.<br /><br />Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government's bailout generosity would not die with George W. Bush and Hank Paulson. "Geithner assures a smooth transition between the Bush administration and that of Obama, because he's already co-managing what's happening now," observed Stephen Leeb, president of Leeb Capital Management.<br /><br />Left unnoticed, however, was the fact that Geithner had been hired by a sitting Citigroup executive who still had a big bonus coming despite his proximity to Obama. In January 2009, just over a month after the bailout, Citigroup paid Froman a year-end bonus of $2.25 million. But as outrageous as it was, that payoff would prove to be chump change for the banker crowd, who were about to get everything they wanted — and more — from the new president.<br /><br />The irony of Bob Rubin: He's an unapologetic arch-capitalist demagogue whose very career is proof that a free-market meritocracy is a myth. Much like Alan Greenspan, a staggeringly incompetent economic forecaster who was worshipped by four decades of politicians because he once dated Barbara Walters, Rubin has been held in awe by the American political elite for nearly 20 years despite having fucked up virtually every project he ever got his hands on. He went from running Goldman Sachs (1990-1992) to the Clinton White House (1993-1999) to Citigroup (1999-2009), leaving behind a trail of historic gaffes that somehow boosted his stature every step of the way.<br /><br />As Treasury secretary under Clinton, Rubin was the driving force behind two monstrous deregulatory actions that would be primary causes of last year's financial crisis: the repeal of the Glass-Steagall Act (passed specifically to legalize the Citigroup megamerger) and the deregulation of the derivatives market. Having set that time bomb, Rubin left government to join Citi, which promptly expressed its gratitude by giving him $126 million in compensation over the next eight years (they don't call it bribery in this country when they give you the money post factum). After urging management to amp up its risky investments in toxic vehicles, a strategy that very nearly destroyed the company, Rubin blamed Citi's board for his screw-ups and complained that he had been underpaid to boot. "I bet there's not a single year where I couldn't have gone somewhere else and made more," he said.<br /><br />Despite being perhaps more responsible for last year's crash than any other single living person — his colossally stupid decisions at both the highest levels of government and the management of a private financial superpower make him unique — Rubin was the man Barack Obama chose to build his White House around.<br /><br />There are four main ways to be connected to Bob Rubin: through Goldman Sachs, the Clinton administration, Citigroup and, finally, the Hamilton Project, a think tank Rubin spearheaded under the auspices of the Brookings Institute to promote his philosophy of balanced budgets, free trade and financial deregulation. The team Obama put in place to run his economic policy after his inauguration was dominated by people who boasted connections to at least one of these four institutions — so much so that the White House now looks like a backstage party for an episode of Bob Rubin, This Is Your Life!<br /><br />At Treasury, there is Geithner, who worked under Rubin in the Clinton years. Serving as Geithner's "counselor" — a made-up post not subject to Senate confirmation — is Lewis Alexander, the former chief economist of Citigroup, who advised Citi back in 2007 that the upcoming housing crash was nothing to worry about. Two other top Geithner "counselors" — Gene Sperling and Lael Brainard — worked under Rubin at the National Economic Council, the key group that coordinates all economic policymaking for the White House.<br /><br />As director of the NEC, meanwhile, Obama installed economic czar Larry Summers, who had served as Rubin's protégé at Treasury. Just below Summers is Jason Furman, who worked for Rubin in the Clinton White House and was one of the first directors of Rubin's Hamilton Project. The appointment of Furman — a persistent advocate of free-trade agreements like NAFTA and the author of droolingly pro-globalization reports with titles like "Walmart: A Progressive Success Story" — provided one of the first clues that Obama had only been posturing when he promised crowds of struggling Midwesterners during the campaign that he would renegotiate NAFTA, which facilitated the flight of blue-collar jobs to other countries. "NAFTA's shortcomings were evident when signed, and we must now amend the agreement to fix them," Obama declared. A few months after hiring Furman to help shape its economic policy, however, the White House quietly quashed any talk of renegotiating the trade deal. "The president has said we will look at all of our options, but I think they can be addressed without having to reopen the agreement," U.S. Trade Representative Ronald Kirk told reporters in a little-publicized conference call last April.<br /><br />The announcement was not so surprising, given who Obama hired to serve alongside Furman at the NEC: management consultant Diana Farrell, who worked under Rubin at Goldman Sachs. In 2003, Farrell was the author of an infamous paper in which she argued that sending American jobs overseas might be "as beneficial to the U.S. as to the destination country, probably more so."<br /><br />Joining Summers, Furman and Farrell at the NEC is Froman, who by then had been formally appointed to a unique position: He is not only Obama's international finance adviser at the National Economic Council, he simultaneously serves as deputy national security adviser at the National Security Council. The twin posts give Froman a direct line to the president, putting him in a position to coordinate Obama's international economic policy during a crisis. He'll have help from David Lipton, another joint appointee to the economics and security councils who worked with Rubin at Treasury and Citigroup, and from Jacob Lew, a former Citi colleague of Rubin's whom Obama named as deputy director at the State Department to focus on international finance.<br /><br />Over at the Commodity Futures Trading Commission, which is supposed to regulate derivatives trading, Obama appointed Gary Gensler, a former Goldman banker who worked under Rubin in the Clinton White House. Gensler had been instrumental in helping to pass the infamous Commodity Futures Modernization Act of 2000, which prevented regulation of derivative instruments like CDOs and credit-default swaps that played such a big role in cratering the economy last year. And as head of the powerful Office of Management and Budget, Obama named Peter Orszag, who served as the first director of Rubin's Hamilton Project. Orszag once succinctly summed up the project's ideology as a sort of liberal spin on trickle-down Reaganomics: "Market competition and globalization generate significant economic benefits."<br /><br />Taken together, the rash of appointments with ties to Bob Rubin may well represent the most sweeping influence by a single Wall Street insider in the history of government. "Rather than having a team of rivals, they've got a team of Rubins," says Steven Clemons, director of the American Strategy Program at the New America Foundation. "You see that in policy choices that have resuscitated — but not reformed — Wall Street."<br /><br />While Rubin's allies and acolytes got all the important jobs in the Obama administration, the academics and progressives got banished to semi-meaningless, even comical roles. Kornbluh was rewarded for being the chief policy architect of Obama's meteoric rise by being outfitted with a pith helmet and booted across the ocean to Paris, where she now serves as America's never-again-to-be-seen-on-TV ambassador to the Organization for Economic Cooperation and Development. Goolsbee, meanwhile, was appointed as staff director of the President's Economic Recovery Advisory Board, a kind of dumping ground for Wall Street critics who had assisted Obama during the campaign; one top Democrat calls the panel "Siberia."<br /><br />Joining Goolsbee as chairman of the PERAB gulag is former Fed chief Paul Volcker, who back in March 2008 helped candidate Obama write a speech declaring that the deregulatory efforts of the Eighties and Nineties had "excused and even embraced an ethic of greed, corner-cutting, insider dealing, things that have always threatened the long-term stability of our economic system." That speech met with rapturous applause, but the commission Obama gave Volcker to manage is so toothless that it didn't even meet for the first time until last May. The lone progressive in the White House, economist Jared Bernstein, holds the impressive-sounding title of chief economist and national policy adviser — except that the man he is advising is Joe Biden, who seems more interested in foreign policy than financial reform.<br /><br />The significance of all of these appointments isn't that the Wall Street types are now in a position to provide direct favors to their former employers. It's that, with one or two exceptions, they collectively offer a microcosm of what the Democratic Party has come to stand for in the 21st century. Virtually all of the Rubinites brought in to manage the economy under Obama share the same fundamental political philosophy carefully articulated for years by the Hamilton Project: Expand the safety net to protect the poor, but let Wall Street do whatever it wants. "Bob Rubin, these guys, they're classic limousine liberals," says David Sirota, a former Democratic strategist. "These are basically people who have made shitloads of money in the speculative economy, but they want to call themselves good Democrats because they're willing to give a little more to the poor. That's the model for this Democratic Party: Let the rich do their thing, but give a fraction more to everyone else."<br /><br />Even the members of Obama's economic team who have spent most of their lives in public office have managed to make small fortunes on Wall Street. The president's economic czar, Larry Summers, was paid more than $5.2 million in 2008 alone as a managing director of the hedge fund D.E. Shaw, and pocketed an additional $2.7 million in speaking fees from a smorgasbord of future bailout recipients, including Goldman Sachs and Citigroup. At Treasury, Geithner's aide Gene Sperling earned a staggering $887,727 from Goldman Sachs last year for performing the punch-line-worthy service of "advice on charitable giving." Sperling's fellow Treasury appointee, Mark Patterson, received $637,492 as a full-time lobbyist for Goldman Sachs, and another top Geithner aide, Lee Sachs, made more than $3 million working for a New York hedge fund called Mariner Investment Group. The list goes on and on. Even Obama's chief of staff, Rahm Emanuel, who has been out of government for only 30 months of his adult life, managed to collect $18 million during his private-sector stint with a Wall Street firm called Wasserstein-Perella.<br /><br />The point is that an economic team made up exclusively of callous millionaire-assholes has absolutely zero interest in reforming the gamed system that made them rich in the first place. "You can't expect these people to do anything other than protect Wall Street," says Rep. Cliff Stearns, a Republican from Florida. That thinking was clear from Obama's first address to Congress, when he stressed the importance of getting Americans to borrow like crazy again. "Credit is the lifeblood of the economy," he declared, pledging "the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money." A president elected on a platform of change was announcing, in so many words, that he planned to change nothing fundamental when it came to the economy. Rather than doing what FDR had done during the Great Depression and institute stringent new rules to curb financial abuses, Obama planned to institutionalize the policy, firmly established during the Bush years, of keeping a few megafirms rich at the expense of everyone else.<br /><br />Obama hasn't always toed the Rubin line when it comes to economic policy. Despite being surrounded by a team that is powerfully opposed to deficit spending — balanced budgets and deficit reduction have always been central to the Rubin way of thinking — Obama came out of the gate with a huge stimulus plan designed to kick-start the economy and address the job losses brought on by the 2008 crisis. "You have to give him credit there," says Sen. Bernie Sanders, an advocate of using government resources to address unemployment. "It's a very significant piece of legislation, and $787 billion is a lot of money."<br /><br />But whatever jobs the stimulus has created or preserved so far — 640,329, according to an absurdly precise and already debunked calculation by the White House — the aid that Obama has provided to real people has been dwarfed in size and scope by the taxpayer money that has been handed over to America's financial giants. "They spent $75 billion on mortgage relief, but come on — look at how much they gave Wall Street," says a leading Democratic strategist. Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion. And while the government continues to dole out big money to big banks, Obama and his team of Rubinites have done almost nothing to reform the warped financial system responsible for imploding the global economy in the first place.<br /><br />The push for reform seemed to get off to a promising start. In the House, the charge was led by Rep. Barney Frank, the outspoken chair of the House Financial Services Committee, who emerged during last year's Bush bailouts as a sharp-tongued critic of Wall Street. Back when Obama was still a senator, he and Frank even worked together to introduce a populist bill targeting executive compensation. Last spring, with the economy shattered, Frank began to hold hearings on a host of reforms, crafted with significant input from the White House, that initially contained some very good elements. There were measures to curb abusive credit-card lending, prevent banks from charging excessive fees, force publicly traded firms to conduct meaningful risk assessment and allow shareholders to vote on executive compensation. There were even measures to crack down on risky derivatives and to bar firms like AIG from picking their own regulators.<br /><br />Then the committee went to work — and the loopholes started to appear.<br /><br />The most notable of these came in the proposal to regulate derivatives like credit-default swaps. Even Gary Gensler, the former Goldmanite whom Obama put in charge of commodities regulation, was pushing to make these normally obscure investments more transparent, enabling regulators and investors to identify speculative bubbles sooner. But in August, a month after Gensler came out in favor of reform, Geithner slapped him down by issuing a 115-page paper called "Improvements to Regulation of Over-the-Counter Derivatives Markets" that called for a series of exemptions for "end users" — i.e., almost all of the clients who buy derivatives from banks like Goldman Sachs and Morgan Stanley. Even more stunning, Frank's bill included a blanket exception to the rules for currency swaps traded on foreign exchanges — the very instruments that had triggered the Long-Term Capital Management meltdown in the late 1990s.<br /><br />Given that derivatives were at the heart of the financial meltdown last year, the decision to gut derivatives reform sent some legislators howling with disgust. Sen. Maria Cantwell of Washington, who estimates that as much as 90 percent of all derivatives could remain unregulated under the new rules, went so far as to say the new laws would make things worse. "Current law with its loopholes might actually be better than these loopholes," she said.<br /><br />An even bigger loophole could do far worse damage to the economy. Under the original bill, the Securities and Exchange Commission and the Commodity Futures Trading Commission were granted the power to ban any credit swaps deemed to be "detrimental to the stability of a financial market or of participants in a financial market." By the time Frank's committee was done with the bill, however, the SEC and the CFTC were left with no authority to do anything about abusive derivatives other than to send a report to Congress. The move, in effect, would leave the kind of credit-default swaps that brought down AIG largely unregulated.<br /><br />Why would leading congressional Democrats, working closely with the Obama administration, agree to leave one of the riskiest of all financial instruments unregulated, even before the issue could be debated by the House? "There was concern that a broad grant to ban abusive swaps would be unsettling," Frank explained.<br /><br />Unsettling to whom? Certainly not to you and me — but then again, actual people are not really part of the calculus when it comes to finance reform. According to those close to the markup process, Frank's committee inserted loopholes under pressure from "constituents" — by which they mean anyone "who can afford a lobbyist," says Michael Greenberger, the former head of trading at the CFTC under Clinton.<br /><br />This pattern would repeat itself over and over again throughout the fall. Take the centerpiece of Obama's reform proposal: the much-ballyhooed creation of a Consumer Finance Protection Agency to protect the little guy from abusive bank practices. Like the derivatives bill, the debate over the CFPA ended up being dominated by horse-trading for loopholes. In the end, Frank not only agreed to exempt some 8,000 of the nation's 8,200 banks from oversight by the castrated-in-advance agency, leaving most consumers unprotected, he allowed the committee to pass the exemption by voice vote, meaning that congressmen could side with the banks without actually attaching their name to their "Aye."<br /><br />To win the support of conservative Democrats, Frank also backed down on another issue that seemed like a slam-dunk: a requirement that all banks offer so-called "plain vanilla" products, such as no-frills mortgages, to give consumers an alternative to deceptive, "fully loaded" deals like adjustable-rate loans. Frank's last-minute reversal — made in consultation with Geithner — was such a transparent giveaway to the banks that even an economics writer for Reuters, hardly a far-left source, called it "the beginning of the end of meaningful regulatory reform."<br /><br />But the real kicker came when Frank's committee took up what is known as "resolution authority" — government-speak for "Who the hell is in charge the next time somebody at AIG or Lehman Brothers decides to vaporize the economy?" What the committee initially introduced bore a striking resemblance to a proposal written by Geithner earlier in the summer. A masterpiece of legislative chicanery, the measure would have given the White House permanent and unlimited authority to execute future bailouts of megaconglomerates like Citigroup and Bear Stearns.<br /><br />Democrats pushed the move as politically uncontroversial, claiming that the bill will force Wall Street to pay for any future bailouts and "doesn't use taxpayer money." In reality, that was complete bullshit. The way the bill was written, the FDIC would basically borrow money from the Treasury — i.e., from ordinary taxpayers — to bail out any of the nation's two dozen or so largest financial companies that the president deems in need of government assistance. After the bailout is executed, the president would then levy a tax on financial firms with assets of more than $10 billion to repay the Treasury within 60 months — unless, that is, the president decides he doesn't want to! "They can wait indefinitely to repay," says Rep. Brad Sherman of California, who dubbed the early version of the bill "TARP on steroids."<br /><br />The new bailout authority also mandated that future bailouts would not include an exchange of equity "in any form" — meaning that taxpayers would get nothing in return for underwriting Wall Street's mistakes. Even more outrageous, it specifically prohibited Congress from rejecting tax giveaways to Wall Street, as it did last year, by removing all congressional oversight of future bailouts. In fact, the resolution authority proposed by Frank was such a slurpingly obvious blow job of Wall Street that it provoked a revolt among his own committee members, with junior Democrats waging a spirited fight that restored congressional oversight to future bailouts, requires equity for taxpayer money and caps assistance to troubled firms at $150 billion. Another amendment to force companies with more than $50 billion in assets to pay into a rainy-day fund for bailouts passed by a resounding vote of 52 to 17 — with the "Nays" all coming from Frank and other senior Democrats loyal to the administration.<br /><br />Even as amended, however, resolution authority still has the potential to be truly revolutionary legislation. The Senate version still grants the president unlimited power over equity-free bailouts, and the amended House bill still institutionalizes a system of taxpayer support for the 20 to 25 biggest banks in the country. It would essentially grant economic immortality to those top few megafirms, who will continually gobble up greater and greater slices of market share as money becomes cheaper and cheaper for them to borrow (after all, who wouldn't lend to a company permanently backstopped by the federal government?). It would also formalize the government's role in the global economy and turn the presidential-appointment process into an important part of every big firm's business strategy. "If this passes, the very first thing these companies are going to do in the future is ask themselves, 'How do we make sure that one of our executives becomes assistant Treasury secretary?'" says Sherman.<br /><br />On the Senate side, finance reform has yet to make it through the markup process, but there's every reason to believe that its final bill will be as watered down as the House version by the time it comes to a vote. The original measure, drafted by chairman Christopher Dodd of the Senate Banking Committee, is surprisingly tough on Wall Street — a fact that almost everyone in town chalks up to Dodd's desperation to shake the bad publicity he incurred by accepting a sweetheart mortgage from the notorious lender Countrywide. "He's got to do the shake-his-fist-at-Wall Street thing because of his, you know, problems," says a Democratic Senate aide. "So that's why the bill is starting out kind of tough."<br /><br />The aide pauses. "The question is, though, what will it end up looking like?"<br /><br />He's right — that is the question. Because the way it works is that all of these great-sounding reforms get whittled down bit by bit as they move through the committee markup process, until finally there's nothing left but the exceptions. In one example, a measure that would have forced financial companies to be more accountable to shareholders by holding elections for their entire boards every year has already been watered down to preserve the current system of staggered votes. In other cases, this being the Senate, loopholes were inserted before the debate even began: The Dodd bill included the exemption for foreign-currency swaps — a gift to Wall Street that only appeared in the Frank bill during the course of hearings — from the very outset.<br /><br />The White House's refusal to push for real reform stands in stark contrast to what it should be doing. It was left to Rep. Paul Kanjorski in the House and Bernie Sanders in the Senate to propose bills to break up the so-called "too big to fail" banks. Both measures would give Congress the power to dismantle those pseudomonopolies controlling almost the entire derivatives market (Goldman, Citi, Chase, Morgan Stanley and Bank of America control 95 percent of the $290 trillion over-the-counter market) and the consumer-lending market (Citi, Chase, Bank of America and Wells Fargo issue one of every two mortgages, and two of every three credit cards). On November 18th, in a move that demonstrates just how nervous Democrats are getting about the growing outrage over taxpayer giveaways, Barney Frank's committee actually passed Kanjorski's measure. "It's a beginning," Kanjorski says hopefully. "We're on our way." But even if the Senate follows suit, big banks could well survive — depending on whom the president appoints to sit on the new regulatory board mandated by the measure. An oversight body filled with executives of the type Obama has favored to date from Citi and Goldman Sachs hardly seems like a strong bet to start taking an ax to concentrated wealth. And given the new bailout provisions that provide these megafirms a market advantage over smaller banks (those Paul Volcker calls "too small to save"), the failure to break them up qualifies as a major policy decision with potentially disastrous consequences.<br /><br />"They should be doing what Teddy Roosevelt did," says Sanders. "They should be busting the trusts."<br /><br />That probably won't happen anytime soon. But at a minimum, Obama should start on the road back to sanity by making a long-overdue move: firing Geithner. Not only are the mop-headed weenie of a Treasury secretary's fingerprints on virtually all the gross giveaways in the new reform legislation, he's a living symbol of the Rubinite gangrene crawling up the leg of this administration. Putting Geithner against the wall and replacing him with an actual human being not recently employed by a Wall Street megabank would do a lot to prove that Obama was listening this past Election Day. And while there are some who think Geithner is about to go — "he almost has to," says one Democratic strategist — at the moment, the president is still letting Wall Street do his talking.<br /><br />Morning, the National Mall, November 5th. A year to the day after Obama named Michael Froman to his transition team, his political "opposition" has descended upon the city. Republican teabaggers from all 50 states have showed up, a vast horde of frowning, pissed-off middle-aged white people with their idiot placards in hand, ready to do cultural battle. They are here to protest Obama's "socialist" health care bill — you know, the one that even a bloodsucking capitalist interest group like Big Pharma spent $150 million to get passed.<br /><br />These teabaggers don't know that, however. All they know is that a big government program might end up using tax dollars to pay the medical bills of rapidly breeding Dominican immigrants. So they hate it. They're also in a groove, knowing that at the polls a few days earlier, people like themselves had a big hand in ousting several Obama-allied Democrats, including a governor of New Jersey who just happened to be the former CEO of Goldman Sachs. A sign held up by New Jersey protesters bears the warning, "If You Vote For Obamacare, We Will Corzine You."<br /><br />I approach a woman named Pat Defillipis from Toms River, New Jersey, and ask her why she's here. "To protest health care," she answers. "And then amnesty. You know, immigration amnesty."<br /><br />I ask her if she's aware that there's a big hearing going on in the House today, where Barney Frank's committee is marking up a bill to reform the financial regulatory system. She recognizes Frank's name, wincing, but the rest of my question leaves her staring at me like I'm an alien.<br /><br />"Do you care at all about economic regulation?" I ask. "There was sort of a big economic collapse last year. Do you have any ideas about how that whole deal should be fixed?"<br /><br />"We got to slow down on spending," she says. "We can't afford it."<br /><br />"But what do we do about the rules governing Wall Street . . ."<br /><br />She walks away. She doesn't give a fuck. People like Pat aren't aware of it, but they're the best friends Obama has. They hate him, sure, but they don't hate him for any reasons that make sense. When it comes down to it, most of them hate the president for all the usual reasons they hate "liberals" — because he uses big words, doesn't believe in hell and doesn't flip out at the sight of gay people holding hands. Additionally, of course, he's black, and wasn't born in America, and is married to a woman who secretly hates our country.<br /><br />These are the kinds of voters whom Obama's gang of Wall Street advisers is counting on: idiots. People whose votes depend not on whether the party in power delivers them jobs or protects them from economic villains, but on what cultural markers the candidate flashes on TV. Finance reform has become to Obama what Iraq War coffins were to Bush: something to be tucked safely out of sight.<br /><br />Around the same time that finance reform was being watered down in Congress at the behest of his Treasury secretary, Obama was making a pit stop to raise money from Wall Street. On October 20th, the president went to the Mandarin Oriental Hotel in New York and addressed some 200 financiers and business moguls, each of whom paid the maximum allowable contribution of $30,400 to the Democratic Party. But an organizer of the event, Daniel Fass, announced in advance that support for the president might be lighter than expected — bailed-out firms like JP Morgan Chase and Goldman Sachs were expected to contribute a meager $91,000 to the event — because bankers were tired of being lectured about their misdeeds.<br /><br />"The investment community feels very put-upon," Fass explained. "They feel there is no reason why they shouldn't earn $1 million to $200 million a year, and they don't want to be held responsible for the global financial meltdown."<br /><br />Which makes sense. Shit, who could blame the investment community for the meltdown? What kind of assholes are we to put any of this on them?<br /><br />This is the kind of person who is working for the Obama administration, which makes it unsurprising that we're getting no real reform of the finance industry. There's no other way to say it: Barack Obama, a once-in-a-generation political talent whose graceful conquest of America's racial dragons en route to the White House inspired the entire world, has for some reason allowed his presidency to be hijacked by sniveling, low-rent shitheads. Instead of reining in Wall Street, Obama has allowed himself to be seduced by it, leaving even his erstwhile campaign adviser, ex-Fed chief Paul Volcker, concerned about a "moral hazard" creeping over his administration.<br /><br />"The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted," Volcker told Congress in September, expressing concerns about all the regulatory loopholes in Frank's bill. "Ultimately, the possibility of further crises — even greater crises — will increase."<br /><br />What's most troubling is that we don't know if Obama has changed, or if the influence of Wall Street is simply a fundamental and ineradicable element of our electoral system. What we do know is that Barack Obama pulled a bait-and-switch on us. If it were any other politician, we wouldn't be surprised. Maybe it's our fault, for thinking he was different.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-36278602629519431292009-12-11T16:48:00.000-08:002009-12-11T17:15:57.000-08:00Supreme Court's Ruling Would Allow Bin Laden to Donate to Sarah Palin's Presidential CampaignOriginal Link: <a href="http://www.alternet.org/rights/144502/supreme_court" page="'entire">http://www.alternet.org/rights/144502/supreme_court's_ruling_would_allow_bin_laden_to_donate_to_sarah_palin's_presidential_campaign?page=entire</a><br /><br />By Greg Palast<br /><br />I'm biting my nails waiting for the Supreme Court's ruling in 'Citizens United v. Federal Election Commission' -- here's why you should be too.<br /><br />I thought that headline would get your attention. And it's true.<br /><br />I'm biting my nails waiting for the Supreme Court's ruling in Citizens United v. Federal Election Commission, which could come down as early as Tuesday. At issue: whether corporations, as "unnatural persons," can make contributions to political campaigns.<br />The outcome is foregone: the five GOP appointees to the court are expected to use the case to junk federal laws that now bar corporations from stuffing campaign coffers.<br /><br />Technically, there's a narrower matter before the court in this case: whether the McCain-Feingold Act may prohibit corporations from funding "independent" campaign advertisements such as the "Swift Boat" ads that smeared John Kerry. However, campaign finance reformers are steeling themselves for the court's right wing to go much further, knocking down all longstanding rules against donations by corporate treasuries.<br /><br />Allowing company campaign spending will not, as progressives fear, cause an avalanche of corporate cash into politics. Sadly, that's already happened: we have been snowed under by tens of millions of dollars given through corporate PACs and "bundling" of individual contributions from corporate pay-rollers.<br /><br />The court's expected decision is far, far more dangerous to U.S. democracy. Think: Manchurian candidates.<br /><br />I'm losing sleep over the millions -- or billions -- of dollars that could flood into our elections from ARAMCO, the Saudi Oil corporation's U.S. unit; or from the maker of "New Order" fashions, the Chinese People's Liberation Army. Or from Bin Laden Construction corporation. Or Bin Laden Destruction Corporation.<br /><br />Right now, corporations can give loads of loot through PACs. While this money stinks (Barack Obama took none of it), anyone can go through a PAC's federal disclosure filing and see the name of every individual who put money into it. And every contributor must be a citizen of the USA.<br /><br />But, if the Supreme Court rules that corporations can support candidates without limit, there is nothing that stops, say, a Delaware-incorporated handmaiden of the Burmese junta from picking a Congressman or two with a cache of loot masked by a corporate alias.<br /><br />Candidate Barack Obama was one sharp speaker, but he would not have been heard, and certainly would not have won, without the astonishing outpouring of donations from two million Americans. It was an unprecedented uprising-by-PayPal, overwhelming the old fat-cat sources of funding.<br /><br />Well, kiss that small-donor revolution goodbye. If the Supreme Court votes as expected, progressive list serves won't stand a chance against the resources of new "citizens" such as CNOOC, the China National Offshore Oil Corporation. Maybe UBS (United Bank of Switzerland), which faces U.S. criminal prosecution and a billion-dollar fine for fraud, might be tempted to invest in a few Senate seats. As would XYZ Corporation, whose owners remain hidden by "street names."<br /><br />George Bush's former Solicitor General Ted Olson argued the case to the court on behalf of Citizens United, a corporate front that funded an attack on Hillary Clinton during the 2008 primary. Olson's wife died on September 11, 2001 on the hijacked airliner that hit the Pentagon. Maybe it was a bit crude of me, but I contacted Olson's office to ask how much "Al Qaeda, Inc." should be allowed to donate to support the election of his local congressman.<br /><br />Olson has not responded.<br /><br />The danger of foreign loot loading into U.S. campaigns, not much noted in the media chat about the Citizens case, was the first concern raised by Justice Ruth Bader Ginsburg, who asked about opening the door to "mega-corporations" owned by foreign governments. Olson offered Ginsburg a fudge, that Congress might be able to prohibit foreign corporations from making donations, though Olson made clear he thought any such restriction a bad idea.<br /><br />Tara Malloy, attorney with the Campaign Legal Center of Washington D.C., is biting her nails awaiting the decision. If Olson gets his way, she told me, corporations will have more rights than people. Only United States citizens may donate or influence campaigns, but a foreign government can, veiled behind a corporate treasury, dump money into ballot battles.<br /><br />Malloy also noted that under the law today, human-people, as opposed to corporate-people, may only give $2,300 to a presidential campaign. But hedge fund billionaires, for example, who typically operate through dozens of corporate vessels, could, should Olson prevail, give unlimited sums through each of these "unnatural" creatures.<br /><br />And once the Taliban incorporates in Delaware, they could ante up for the best democracy money can buy.<br /><br />In July, the Chinese government, in preparation for President Obama's visit, held diplomatic discussions in which they skirted issues of human rights and Tibet. Notably, the Chinese, who hold a $2 trillion mortgage on our Treasury, raised concerns about the cost of Obama's health care reform bill. Would our nervous Chinese landlords have an interest in buying the White House for an opponent of government spending such as Gov. Palin? Ya betcha!<br /><br />The potential for foreign infiltration of what remains of our democracy is an adjunct of the fact that the source and control money from corporate treasuries (unlike registered PACs), is necessarily hidden. Who the heck are the real stockholders? Or as Butch asked Sundance, "Who are these guys?" We'll never know.<br /><br />Hidden money funding, whether foreign or domestic, is the new venom that the court could inject into the system by an expansive decision in Citizens United.<br /><br />We've been there. The 1994 election brought Newt Gingrich to power in a GOP takeover of the Congress funded by a very strange source. Congressional investigators found that in crucial swing races, Democrats had fallen victim to a flood of last-minute attack ads funded by a group called, "Coalition for Our Children's Future." The $25 million that paid for those ads came, not from concerned parents, but from a corporation called "Triad Inc."<br /><br />Evidence suggests Triad Inc. was the front for the ultra-right-wing billionaire Koch Brothers and their private petroleum company, Koch Industries. Had the corporate connection been proven, the Kochs and their corporation could have faced indictment under federal election law. If the Supreme Court now decides in favor of unlimited corporate electioneering, then such money-poisoned politicking would become legit.<br /><br />So it's not just un-Americans we need to fear but the Polluter-Americans, Pharma-mericans, Bank-Americans and Hedge-Americans that could manipulate campaigns while hidden behind corporate veils.<br /><br />And if so, our future elections, while nominally a contest between Republicans and Democrats, may in fact come down to a three-way battle between China, Saudi Arabia and Goldman Sachs.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-23453968105013536552009-12-10T21:40:00.000-08:002009-12-10T21:42:40.641-08:00The Banks Are Not All RightOriginal Link: <a href="http://www.nytimes.com/2009/10/19/opinion/19krugman.html">http://www.nytimes.com/2009/10/19/opinion/19krugman.html</a><br /><br />By PAUL KRUGMAN<br /><br />It was the best of times, it was the worst of times. O.K., maybe not literally the worst, but definitely bad. And the contrast between the immense good fortune of a few and the continuing suffering of all too many boded ill for the future.<br /><br />I’m talking, of course, about the state of the banks.<br /><br />The lucky few garnered most of the headlines, as many reacted with fury to the spectacle of Goldman Sachs making record profits and paying huge bonuses even as the rest of America, the victim of a slump made on Wall Street, continues to bleed jobs.<br /><br />But it’s not a simple case of flourishing banks versus ailing workers: banks that are actually in the business of lending, as opposed to trading, are still in trouble. Most notably, Citigroup and Bank of America, which silenced talk of nationalization earlier this year by claiming that they had returned to profitability, are now — you guessed it — back to reporting losses.<br /><br />Ask the people at Goldman, and they’ll tell you that it’s nobody’s business but their own how much they earn. But as one critic recently put it: “There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system.” Indeed: Goldman has made a lot of money in its trading operations, but it was only able to stay in that game thanks to policies that put vast amounts of public money at risk, from the bailout of A.I.G. to the guarantees extended to many of Goldman’s bonds.<br /><br />So who was this thundering bank critic? None other than Lawrence Summers, the Obama administration’s chief economist — and one of the architects of the administration’s bank policy, which up until now has been to go easy on financial institutions and hope that they mend themselves.<br /><br />Why the change in tone? Administration officials are furious at the way the financial industry, just months after receiving a gigantic taxpayer bailout, is lobbying fiercely against serious reform. But you have to wonder what they expected to happen. They followed a softly, softly policy, providing aid with few strings, back when all of Wall Street was on the ropes; this left them with very little leverage over firms like Goldman that are now, once again, making a lot of money.<br /><br />But there’s an even bigger problem: while the wheeler-dealer side of the financial industry, a k a trading operations, is highly profitable again, the part of banking that really matters — lending, which fuels investment and job creation — is not. Key banks remain financially weak, and their weakness is hurting the economy as a whole.<br /><br />You may recall that earlier this year there was a big debate about how to get the banks lending again. Some analysts, myself included, argued that at least some major banks needed a large injection of capital from taxpayers, and that the only way to do this was to temporarily nationalize the most troubled banks. The debate faded out, however, after Citigroup and Bank of America, the banking system’s weakest links, announced surprise profits. All was well, we were told, now that the banks were profitable again.<br /><br />But a funny thing happened on the way back to a sound banking system: last week both Citi and BofA announced losses in the third quarter. What happened?<br /><br />Part of the answer is that those earlier profits were in part a figment of the accountants’ imaginations. More broadly, however, we’re looking at payback from the real economy. In the first phase of the crisis, Main Street was punished for Wall Street’s misdeeds; now broad economic distress, especially persistent high unemployment, is leading to big losses on mortgage loans and credit cards.<br /><br />And here’s the thing: The continuing weakness of many banks is helping to perpetuate that economic distress. Banks remain reluctant to lend, and tight credit, especially for small businesses, stands in the way of the strong recovery we need.<br /><br />So now what? Mr. Summers still insists that the administration did the right thing: more government provision of capital, he says, would not “have been an availing strategy for solving problems.” Whatever. In any case, as a political matter the moment for radical action on banks has clearly passed.<br /><br />The main thing for the time being is probably to do as much as possible to support job growth. With luck, this will produce a virtuous circle in which an improving economy strengthens the banks, which then become more willing to lend.<br /><br />Beyond that, we desperately need to pass effective financial reform. For if we don’t, bankers will soon be taking even bigger risks than they did in the run-up to this crisis. After all, the lesson from the last few months has been very clear: When bankers gamble with other people’s money, it’s heads they win, tails the rest of us lose.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-64384902811713913582009-12-10T15:48:00.000-08:002009-12-10T15:51:20.058-08:00How The Right-Wing Noise Machine Manufactured ‘Climategate’Original Link: <a href="http://wonkroom.thinkprogress.org/2009/12/09/climate-gate-timeline/">http://wonkroom.thinkprogress.org/2009/12/09/climate-gate-timeline/</a><br /><br />By Lee Fang<br /><br />In mid-November, thousands of emails from the University of East Anglia Climatic Research Unit webmail server — a top climate research center in the United Kingdom — were hacked and dumped on a Russian web server. Polluter-funded climate skeptics, along with their allies in conservative media and the Republican Party, sifted through the e-mails, and quickly cherry picked quotes to falsely accuse climate scientists of concocting climate change science out of whole cloth. The skeptics also propelled the story, dubbed “Climategate,” to the cover of the New York Times and newspapers across the globe. According to a Nexis news search, the Climategate story has been reported at least 325 times in the American press alone.<br /><br />While the hacked e-mails may reveal that scientists might not have nice things to say about climate change deniers at times, they do nothing to change the scientific consensus that carbon dioxide emissions from fossil fuel use are raising temperatures and making oceans more acidic. As the right attempts to use the Climategate story to derail the Copenhagen Climate Change Conference this week, arctic sea ice is still at historically low levels, Australia is still on fire, the northern United Kingdom is still underwater, the world’s glaciers are still disappearing and today NOAA confirmed that not only is it the hottest decade in history, but 2009 was one of the hottest years in history. But how did the right-wing noise machine hijack the debate?<br /><br />The methods for the right-wing political hit machine were honed during the Clinton years. Columnist and language-guru William Safire, a former aide to actual Watergate crook President Nixon, attached “-gate” to any minor post-Nixon incident as a “rhetorical legerdemain” intended “to establish moral equivalence.” (See phony manufactured scandals “Travelgate,” “Whitewatergate,” etc.) A right-wing echo chamber — including the Rev. Moon-funded Washington Times, the Wall Street Journal editorial page, talk radio, and the constellation of various conservative front groups and think tanks — would then blare the scandal incessantly, regardless of the truth. But the more troubling aspect of this gimmick is the increasing willingness for traditional media outlets, from the Evening News to the Washington Post, to largely reprint unfounded right-wing smears without context or critical reporting.<br /><br />One of the most successful coups for right-wing hit men was the “SwiftBoat” campaign, a well financed effort orchestrated by lobbyists and Bush allies to smear Sen. John Kerry’s (D-MA) war record. But “Climategate” is no different, with many of the same conservatives actors playing their respective roles:<br /><br />(Click MORE to read the Wonk Room’s timeline of Climategate)<br /><br />Nov. 17:<br /><br />– RealClimate blogger Gavin Schmidt realized that someone was hacking his computer and downloading 160MB of files from a Turkish IP address. About an hour after the intrusion, a mysterious commenter at the climate skeptic blog Climate Audit posted a link to the hacked files with a note reading: “A miracle just happened.” Schmidt noted that, “four downloads occurred from that link while the file was still there (it no longer is).”<br /><br />Nov. 19:<br /><br />– Hackers then used a computer in Saudi Arabia to post the stolen e-mails, stored on a Russian server, on the climate skeptic website Air Vent.<br /><br />– Skeptic blog “Watts Up With That” curiously is among the first blogs to posts the hacked e-mails.<br /><br />– Chris Horner, an operative of the Koch Industries/ExxonMobil-funded Competitive Enterprise Institute, blogged giddily at National Review that although he had not been “able to fully digest this at present,” “the blue dress moment may have arrived” on climate science.<br /><br />– Sarah Palin appears on Fox News’ O’Reilly Factor to discuss her new book. Palin and O’Reilly compare a young man who briefly hacked into her e-mail account in 2008, calling the incident “extremely disconcerting and disruptive” and “Watergate-lite.” O’Reilly and Plain do not discussed the hacked climate e-mails.<br /><br />Nov. 20:<br /><br />– In a front page article, the New York Times’ Andy Revkin reports that the e-mails “might lend themselves to being interpreted as sinister.”<br /><br />– Myron Ebell, of the Koch Industries/ExxonMobil-funded Competitive Enterprise Institute, releases a statement pointing to the stolen e-mails to conclude that global warming science is “phony.”<br /><br />– Reading reports on right-wing blogs on air, Rush Limbaugh dedicates a segment to the hacked e-mails, claiming they vindicate his belief that global warming does not exist.<br /><br />– Conservative Ed Morrissey concluded the e-mails prove global warming is “not science; it’s religious belief.”<br /><br />– Right-wing blogger Michelle Malkin cheers “the global warming scandal of the century,” adding: “The Chicago Way is the Global Warming Mob Way.”<br /><br />– ExxonMobil-funded front group FreedomWorks blasts out an e-mail asking “Has the Global Warming Lie and Conspiracy Been Truly Exposed?”<br /><br />– Marc Morano, a former Sen. Jim Inhofe (R-OK) staffer who helps to distribute climate change denying propaganda to a network of news outlets and conservative organizations, broadcasts Climategate to talk radio.<br /><br />— The Wall Street Journal’s environmental blog publicizes the conservative blogosphere’s furor: “this should get interesting … Maybe this will spice things up.”<br /><br />Nov. 22:<br /><br />– Sen. David Vitter’s (R-LA) staff distributes a letter claiming the stolen e-mails reveal what “could well be the greatest act of scientific fraud in history.”<br /><br />Nov. 23:<br /><br />– Heralding the stolen e-mails, infamous climate science skeptic Sen. Jim Inhofe (R-OK) and Rep. Darrell Issa (R-CA) call for congressional investigations against climate scientists.<br /><br />– Fox News’ Fox Nation headlines the e-mails: “Global Warming’s Waterloo”<br /><br />– Glenn Beck devotes both his radio and Fox News program to covering Climategate, claims the e-mails show a “brand new reality” on climate science.<br /><br />– Investors’ Business Daily editorializes that the e-mails show that global warming is “junk science.”<br /><br />– The ExxonMobil-funded Heritage Foundation publicizes the stolen e-mails.<br /><br />– Right-wing activist Viscount Monckton says climate scientists are “criminals.”<br /><br />Nov. 24:<br /><br />– Fox News’ Stu Varney begins his daily coverage of Climategate. He continues to attack global warming science, using the e-mails, on both the Fox News and Fox Business network.<br /><br />– Washington Times editorial board, Drudge Report, both chime in to claim hacked e-mails show global warming is not real.<br /><br />Nov. 29:<br /><br />– Fox News regular Andrew Breitbart calls for climate scientists to be killed over Climategate.<br /><br />Nov. 30:<br /><br />– Rep. Candace Miller (R-MI) issues a statement to demand for an investigation of Climategate, and begins speaking about it on the floor of the House. In the following week, Reps Jim Sensenbrenner (R-WI), Darrell Issa (R-CA), John Linder (R-GA), Bill Shuster (R-PA), Joe Barton (R-TX), Blaine Luetkemeyer (R-MO), Dana Rohrbacher (R-CA), Mike Rogers (R-MI), Dan Burton (R-IN), Steve Scalise (R-LA), Greg Walden (R-OR) and Charlie Dent (R-PA) begin blasting press releases on the subject.<br /><br />Dec. 1:<br /><br />– Newt Gingrich, who only 2 years ago said America must act “urgently” to address climate change, seizes on the stolen e-mails to spread skepticism of global warming science. Gingrich’s political attack group, ASWF, is heavily funded by coal interests.<br /><br />Dec. 2:<br /><br />– Right-wing billionaire David Koch, of the oil empire Koch Industries, sends his front group Americans for Prosperity to attend the Copenhagen conference to attempt to hijack the debate. AFP intends to “expose” the science using the stolen e-mails.<br /><br />Dec. 3:<br /><br />– Canada’s National Post reports that burglars and hackers have been attacking the Canadian Center for Climate Modeling and Analysis at the University of Victoria in British Columbia. In the lead up to the Copenhagen conference, Andrew Weaver — a University of Victoria scientist and key contributor to the Nobel prize-winning work of the Intergovernmental Panel on Climate Change — noted that his campus office was broken into twice and that a dead computer was stolen and papers were rummaged through.<br /><br />– Saudi Arabian climate negotiators for the Copenhagen summit endorse Climategate, charging that the e-mail show “there is no relationship whatsoever between human activities and climate change.”<br /><br />– Fox News’ Brian Kilmeade says “damning” e-mails show scientists who “think … Antartica is becoming like the Bahamas.”<br /><br />Dec. 4:<br /><br />– NBC’s Nightly News with Brian Williams adopts right-wing Climategate smear: “Have the books been cooked on climate change?”<br /><br />Dec. 7:<br /><br />– ExxonMobil-funded think tanks the Heartland Institute and the National Center for Policy Analysis publicize the e-mails to “discredit” global warming science.<br /><br />Dec. 8:<br /><br />– The Wall Street Journal accuses climate scientists of being Stalinists.<br /><br />– Fox News devotes a segment to a right-wing Rasmussen poll with a graphic that claims 120 percent of the public believes scientists falsified global warming data.<br /><br />Dec. 9:<br /><br />– Sarah Palin, who only weeks earlier decried the hacking of e-mails, writes in an op-ed that the Climategate e-mails are proof that anthropogenic global warming does not exist. The Washington Post publishes Palin’s op-ed, despite the fact it is riddled with errors and outright falsehoods.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-22313593888857770162009-12-06T20:42:00.000-08:002009-12-06T20:43:45.433-08:00Worse Than Enron?Original Link: <a href="http://www.thedailybeast.com/blogs-and-stories/2009-12-01/worse-than-enron/full/">http://www.thedailybeast.com/blogs-and-stories/2009-12-01/worse-than-enron/full/</a><br /><br />by Nomi Prins<br /><br />Wall Street’s big banks are playing dangerous new accounting games—and this time taxpayers are on the hook for hundreds of billions. Nomi Prins uncovers a scandal in the making.<br /><br />Enron was the financial scandal that kicked off the decade: a giant energy trading company that appeared to be doing brilliantly—until we finally noticed that it wasn’t. It’s largely been forgotten given the wreckage that followed, and that’s too bad: we may be repeating those mistakes, on a far larger scale.<br /><br />Specifically, as the largest Wall Street banks return to profitability—in some cases, breaking records—they say everything is rosy. They’re lining up to pay back their TARP money and asking Washington to back off. But why are they doing so well? Remember that Enron got away with their illegalities so long because their financials were so complicated that not even the analysts paid to monitor the Houston-based trading giant could cogently explain how they were making so much money.<br /><br />The nation’s biggest banks, plumped up on government capital and risk-infused trading profits, have been moving stuff around their balance sheets like a multi-billion dollar musical chairs game.<br /><br />After two weeks sifting through over one thousand pages of SEC filings for the largest banks, I have the same concerns. While Washington ponders what to do, or not do, about reforming Wall Street, the nation’s biggest banks, plumped up on government capital and risk-infused trading profits, have been moving stuff around their balance sheets like a multi-billion dollar musical chairs game.<br /><br />I was trying to answer the simple question that you'd think regulators should want to know: how much of each bank’s revenue is derived from trading (taking risk) vs. other businesses? And how can you compare it across the industry—so you can contain all that systemic risk? Only, there's no uniformity across books. And, given the complexity of these mega-merged firms, those questions aren’t easy to answer.<br /><br />Goldman Sachs and Morgan Stanley, for example, altered their year-end reporting dates, orphaning the month of December, thus making comparison to past quarterly statements more difficult. In the cases of Bank of America, Citigroup and Wells Fargo, the preferred tactic is re-classification and opaqueness. These moves make it virtually impossible to get an accurate, or consistent picture of banks ‘real money’ (from commercial or customer services) vs. their ‘play money’ (used for trading purposes, and most risky to the overall financial system, particularly since much of the required trading capital was federally subsidized).<br /><br />Trading profitability, albeit inconsistent and volatile, is the quickest way back to the illusion of financial health, as these banks continue to take hits from their consumer-oriented businesses. But, appearance doesn’t equal stability, or necessarily, reality. Here’s how BofA, Citi and Wells Fargo play the game:<br /><br />Bank of America: The firm reclassified its filing categories upon acquiring Merrill Lynch, but it doesn't break down the trading vs. investment banking revenues of Merrill. This either means the firm doesn’t truly know what's going on inside its new problem child, or doesn’t want to tell. (No wonder no one’s jumping for the upcoming CEO vacancy.) That said, despite the obvious information clouding, new acquisitions generally don’t have their activities broken out, which makes it a lot harder for regulators, shareholders, or we, taxpaying subsidizers, to know whether the merger was a success or not.<br /><br />According to Scott Silvestri, Bank of America’s spokesman, “On our second quarter's earnings release, there was a note explaining why we changed reporting structure. But, with every quarter that passes, it's harder to unscramble the egg. It's been a merged entity since January 1, 2009.”<br /><br />He added that “we have an earnings supplement. Every quarter, we put out a standalone Merrill 10-Q that shows its profitability.” True, but what’s the point of issuing a separate Merrill report, without delineating Merrill’s contribution in its main books so that you can clearly see how specific parts of Merrill’s business impact similar ones in the merged entity? Furthermore, we can’t even figure this out ourselves—the Merrill results in the 10-Q don’t map directly to those of BofA’s books. This all just creates more complexities for a bank that still floats on $63.1 billion in various government subsidies.<br /><br />When it wants to, it appears that BofA can merge and then break out Merrill’s numbers. Under the "Global Wealth & Investment Management ” classification, we discover that Merrill contributed three-quarters of the $12 billion BofA took in over the first nine months of 2009. According to Silvestri, “The numbers of the old Merrill are there because the brand name was kept, vestiges of the old Merrill Lynch exist.”<br /><br />Talk about semantics. Why not also break out the area where revenues tripled and trading account profits jumped significantly (from a $6 billion loss in 2008 to an almost $14 billion gain in 2009)? Something is clearly going on there: the best measure of trading risk, VaR (“value at risk” or a firm’s daily trading variation) doubled between 2008 and 2009. If I was the CEO, I’d want to see this critical comparison on my merged company filing.<br /><br />Elsewhere, the sum of Bank of America’s quarterly figures doesn’t quite add up to the nine months totals. (A few hundred million of discrepancies between friends.) Another item "all other" is off by nearly a quarter of a billion dollars. And so on. The firm also declared, that it “may periodically reclassify business segment results based on modifications to its management reporting methodologies and changes in organizational alignment." In other words, whenever it feels like it. Comforting, isn’t it?<br /><br />Citigroup: Another balance-sheet renovation, this time because of a sale (Smith Barney, which it offloaded to Morgan Stanley) rather than a purchase, and another trading miracle. Citigroup’s main trading arm, housed in what it calls the Institutional Clients Group (ICG), made $31.5 billion in net revenue for 2009, compared with a $7.8 billion loss in 2008. Its average daily value at risk jumped too, though “only” by 15 percent or so.<br /><br />That’s a huge and extremely fast trading rebound for the main recipient of government subsidies (at $373.7 billion). But, there is no overall breakdown present in the summaries of Citigroup’s latest filings. And the sum of the trading totals doesn’t equal the parts, because the firm also noted that certain numbers deemed an “integral part of profitability” weren’t included in those computations, without giving any apparent reason. (After adding the missing number, it still didn’t add up.)<br /><br />Again, it’s “just” a couple billion of discrepancies, but with books this massive at banks this big and risky, accuracy matters. Plus, such nuances make it extremely difficult to understand its books for regulators or the public.<br /><br />Citigroup's Danielle Romero-Apsilos said that they periodically change reporting. "ICG existed, but after Smith Barney's joint venture with Morgan Stanley, we moved the private bank into the securities and banking reporting line in the ICG."<br /><br />That describes the chain of events, but doesn’t get closer to determining trading related revenue. Romero-Apsilos said, “We don’t break up the financials specifically for those businesses. Over the years, we may have broken out different things."<br /><br />Wells Fargo: Yet more innovative accounting maneuvers. For example, the innocuous sounding category, “wholesale banking” which provides traditional lending, finance and asset management services, was expanded (following the Wachovia acquisition that completed on December 31, 2008) to include more speculative activities like fixed-income and equity trading. But, those activities aren’t broken down in the firm’s SEC filing, making it difficult to determine which portion comes from trading vs. commercial or investment banking.<br /><br />Wells Fargo spokesperson, Mary Eshet (who still has a Wachovia email address) confirmed there is no separate Wachovia 10-Q (like there is for Merrill Lynch), but that it wasn't the case that "Wells Fargo broke out trading related revenue previously either."<br /><br />In fact, Wells just provides totals for their four main business segments, each of which increased sharply. Community banking rose from $33 billion in 2008 to an annualized $59 billion in 2009. Wholesale banking shot up from $8.2 billion in 2008 to $20 billion in annualized 2009. And, wealth, brokerage and retirement quadrupled from $2.7 billion in 2008 to $11.6 annualized for 2009. (The fourth segment is called ‘other.’) Yet, all these rosy numbers come with no specific breakdowns for their various trading business areas.<br /><br />Separately, Wells states in its filing that its management accounting process is “dynamic” and, not “necessarily comparable with similar information for other financial services companies.” This statement should give lawmakers pause: if banks are so complex as to constantly fluctuate their own reporting, deciphering figures just before a crisis won’t exactly be a walk in the park.<br /><br />With taxpayers now on the hook, we need an objective, consistent evaluation of bank balance sheets complete with probing questions about trading and speculative revenues, allowing for comparisons across the banking industry. This lack of transparency leaves room to misrepresent risk and trading revenue.<br /><br />The long-term solution is bringing back Glass-Steagall. Being big doesn’t just risk bringing down a financial system—it means you can also more easily hide things. Remember the lesson from the Enron saga: when things look too good to be true, they usually are.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-76016320122094133772009-12-06T17:34:00.000-08:002009-12-06T17:37:03.065-08:00Aetna prepares for loss of 600,000 members as it raises 2010 pricesOriginal Link: <a href="http://pnhp.org/blog/2009/11/30/aetna-to-dump-600000-members/">http://pnhp.org/blog/2009/11/30/aetna-to-dump-600000-members/</a><br /><br />By Emily Berry<br /><br />Back when it was the largest private health plan in the country, Aetna downsized its membership by millions but boosted profits during an overhaul of its business several years ago.<br /><br />Now it looks to be making a similar — but smaller — move with a planned price increase for many of its customers in 2010.<br /><br />The company figures it will lose between 600,000 and 650,000 members next year because of the price hikes.<br /><br />In a conference call with investment analysts to discuss the company’s third-quarter earnings, Chair and CEO Ron Williams told analysts, “The pricing we put in place for 2009 turned out to not really be what we needed to achieve the results and margins that we had historically been delivering.”<br /><br />Aetna President Mark Bertolini laid out how the company planned to raise prices to improve the company’s profit margin. He said the firm had “implemented a combination of underwriting enhancements, pricing actions and plan design changes, intended to ensure that each customer is priced to an appropriate margin.”<br /><br />Laying out specific expected membership losses is “pretty candid,” said David Gibbs, a retired health insurance industry consultant from San Luis Obispo, Calif. He worked for and consulted with health insurers, including Aetna, for 25 years.<br /><br />He said Aetna’s decision comes from a system that encourages insurers to drive away sicker members — a strategy not unique to one insurer. “They’re running a business, and their obligation is a very singular one: to increase shareholder profits.”<br /><br />Gibbs said simply raising prices probably would not get Aetna what it wants. That actually tends to result in sick people who are more “desperate” for coverage to keep it, and healthier groups to drop it. Instead, Aetna might change benefit designs, scaling back prescription drug coverage, for example, which sicker populations tend to value but healthier ones don’t notice as much.<br /><br />http://www.ama-assn.org/amednews/2009/11/30/bisb1130.htm<br /><br />This act by Aetna indicates the level of sincerity the insurance industry has in its alleged new effort to cooperate in ensuring that everyone has the health care coverage that they need. Aetna is redesigning and repricing its products in order to dump over 600,000 of its less profitable members. They need to be sure that “each customer is priced to an appropriate margin.” And, above all, they owe it to their shareholders “to drive away sicker members.”<br /><br />But that’s one of the ways that markets work – improve profits by cutting losses. We keep hearing that markets improve quality while reducing costs, yet in a bit of irony, for those healthier populations that remain with the Aetna, the insurer is reducing quality through product redesign, and increasing costs through higher premiums.<br /><br />Once Aetna dumps these members, what private insurer is going to jump in to capture this higher cost population? None you say? And under reform? The higher cost individuals buy into the weak public option driving premiums up through adverse selection to even more unaffordable levels?<br /><br />Try to imagine Medicare dumping over 600,000 patients because they need more medical care. That is unthinkable and would be reprehensible in a public social insurance program such as Medicare. Yet for the private insurance industry, it’s business as usual. And President Obama and Congress want to keep these marketeers in charge? Talk about reprehensible!Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-46651353570962455152009-12-06T15:28:00.000-08:002009-12-06T15:30:06.159-08:00The other right-wing media mogul you should worry aboutOriginal Lin: <a href="http://mediamatters.org/columns/200911250046">http://mediamatters.org/columns/200911250046</a><br /><br />By Jamison Foser<br /><br />If you like what Rupert Murdoch, the right-wing billionaire behind Fox News and the New York Post, has done for the national discourse, you'll love what Philip Anschutz is trying to do in your hometown.<br /><br />Anschutz built his fortune -- his $8 billion net worth is good for 36th place on the Forbes 400, ahead of better-known Murdoch and Steve Jobs -- in the oil and gas industry, augmented with railroad and telecommunications holdings, as well as Regal Cinemas and the production company behind The Chronicles of Narnia films.<br /><br />The far-right American Spectator describes Anschutz as "a committed conservative" who "gives lots of money to the Republican National Committee and to GOP candidates" and is "friendly with fellow oilman George W. Bush."<br /><br />In 2005, Media Matters detailed Anschutz's history of conservative activism:<br /><br />Anschutz has a history of supporting socially conservative causes. According to a recent Post article, Anschutz's family foundation gave James Dobson, the founder of the conservative Christian organization Focus on the Family, an award for his "contributions to the American Family." The Post noted that according to the foundation's website, Focus on the Family works to "counter the media-saturating message that homosexuality is inborn and unchangeable" and that one of the group's policy experts referred to abortion as an example of when "Satan temporarily succeeds in destroying God's creation." Further, as the Post mentioned, Anschutz contributed $10,000 in 1992 to Colorado Family Values in support of the group's efforts to pass a state constitutional amendment to invalidate state and local laws that prohibited discrimination based on sexual orientation. (The referendum passed, but the United States Supreme Court struck it down as unconstitutional.) According to the Post, "Anschutz's money helped pay for an ad campaign that said such anti-bias laws gave gays and lesbians 'special rights.'"<br /><br />In May 2003, the Orange County Weekly reported that other Anschutz Foundation beneficiaries include the Institute for American Values, which according to the Weekly "campaigns against single parenting," and Enough is Enough, which "promotes Internet censorship." The San Francisco Chronicle noted on February 20, 2004, that Anschutz also funds Morality in Media. As Media Matters previously noted, the Institute for American Values also receives funding from the conservative Bradley and Scaife foundations, as well as grants from the John M. Olin Foundation, another major financer of conservative organizations. Enough is Enough and Morality in Media have also received funding from the conservative Castle Rock Foundation.<br /><br />In recent years, Anschutz has turned his attention to his media holdings, including his movie production company. And he is building a news-media empire, as well: he bought the San Francisco Examiner in 2004 and launched the Washington Examiner the next year, while trademarking the "Examiner" name in more than 60 cities. And earlier this year, Anschutz purchased The Weekly Standard from Murdoch.<br /><br />Anschutz and the people in his employ are quick to counter suggestions that his right-wing politics drive editorial decisions at his newspapers. A 2007 profile of Anschutz in American Journalism Review included a Washington Examiner editor stressing that Anshutz had told him "All I want to do is put out quality newspapers." A 2004 Washington Post article quoted another Anschutz employee stressing that Anschutz had "taken no hand in the operations, nor in demanding any particular editorial policy."<br /><br />But Anschutz's publications certainly do reflect his conservative views.<br /><br />Earlier this year, Media Matters' Terry Krepel detailed the right-wing tilt to the Washington Examiner's staff, including alums of the National Review, The Washington Times, NewsBusters, Robert Novak's newsletter, the American Enterprise Institute, and the Heritage Foundation.<br /><br />And those kinds of staffing decisions lead to headlines like these, all featured on the front of the Washington Examiner's web page Wednesday afternoon: <br /><br />Are Democrats exiting the sinking ship?<br />Inside the numbers: How Obama has fallen<br />Global warming industry becomes too big to fail<br />Youngest voters spurn Obamacare<br />Damn the deficit: Full speed ahead on health care<br />Then there's the Opinion section, which features such gems as:<br /><br />Gene Healy: Obamacare is unconstitutional<br />Grace-Marie Turner: Ten reasons public won't buy Senate health care plan<br />Dr. David Gratzer: Medicine isn't perfect, Obamacare is even less perfect<br />Ken Blackwell: Obama's indecision is hurting foreign alliances<br />If Anschutz's right-wing politics were shaping only the Washington Examiner, it might not matter much. Washington has plenty of conservative media; how much damage can one more do -- particularly given that The Washington Times (another newspaper controlled by a right-wing billionaire) is in danger of imploding?<br /><br />But remember: Anschutz trademarked the "Examiner" name in more than 60 other cities. And he is making a push into the "hyper-local" news market with his Examiner.com sites.<br /><br />Anschutz launched Examiner.com about a year and a half ago as an Internet-only local news portal; it currently reaches 129 markets and its traffic ranks 21st among U.S. news sites -- with the fastest traffic growth of any site from August of 2008 to August of 2009. And just a few weeks ago, Examiner.com bought NowPublic, a Canadian citizen-journalism site with reporters in more than 140 countries. The New York Times reported at the time:<br /><br />With the sale, Examiner.com, a unit of Mr. Anschutz's Clarity Digital Group, became the latest company to show interest in a lively corner of the Web: the tools that let people read and share the news around them, sometimes down to neighborhood blocks.<br /><br />[...]<br /><br />Rick Blair, the chief executive of Examiner.com, said in an interview that his company's expansion into more than 100 markets indicated that hyperlocal information could be a scalable and sustainable business. Whether it can be profitable is still to be determined. "We're trying many ways to determine the advertiser interest," he said.<br /><br />Given the newspaper industry's struggles, it isn't inconceivable that Examiner.com could quickly become a key source of news and information for many Americans. At which point, based on Anschutz's history, it'll be like having a local version of Fox News Channel in every city in America.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-34075999003804381892009-12-06T13:20:00.000-08:002009-12-06T13:22:16.072-08:00GOP Senator Pens Obstruction Manual For Health CareOriginal Link: <a href="http://www.huffingtonpost.com/2009/12/02/read-it-gop-senator-pens_n_377386.html">http://www.huffingtonpost.com/2009/12/02/read-it-gop-senator-pens_n_377386.html</a><br /><br />By Sam Stein<br /><br />Sen. Judd Gregg, (R-NH) has penned the equivalent of an obstruction manual -- a how-to for holding up health care reform -- and has distributed the document to his Republican colleagues.<br /><br />Insisting that it is "critical that Republican senators have a solid understanding of the minority's rights in the Senate," Gregg makes note of all the procedural tools the GOP can use before measures are considered, when they come to the floor and even after passage.<br /><br />He highlights the use of hard quorum calls for any motion to proceed, as opposed to a far quicker unanimous consent provision. He reminds his colleagues that, absent unanimous consent, they can force the Majority Leader to read any "full-text substitute amendment." And when it comes to offering amendments to the health care bill, the New Hampshire Republican argues that it is the personification of "full, complete, and informed debate," to "offer an unlimited number of amendments -- germane or non-germane -- on any subject."<br /><br />The details of Gregg's outline are a clear reflection of the extent to which Republicans are turning to the Byzantine processes of the Senate chamber as a means of holding up reform. And doing so with eagerness. Take for instance, the section on offering a "point of order."<br /><br />"A Senator may make a point of order at any point he or she believes that a Senate procedure is being violated, with or without cause," he writes. "After the presiding officer rules, any Senator who disagrees with such ruling may appeal the ruling of the chair--that appeal is fully debatable. Some points of order, such as those raised on Constitutional grounds, are not ruled on by the presiding officer and the question is put to the Senate, then the point of order itself is fully debatable. The Senate may dispose of a point of order or an appeal by tabling it; however, delay is created by the two roll call votes in connection with each tabling motion (motion to table and motion to reconsider that vote)."<br /><br />Senate Majority Leader Harry Reid's office pounced on such a vivid example of Republican instransigence. "Just in time for the holidays, here it is in black and white, the Republicans' manual for stall, stop and delay," said Jim Manley, Reid's spokesman. "And what do the American people get? -- higher costs and less coverage. What kind of present is that?"<br /><br />Even if health care is passed out of the Senate, Gregg has outlined ways in which Republicans can slow its passage.<br /><br />"The Senate must pass 3 separate motions to go to conference: (1) a motion to insist on its amendments or disagree with the House amendments; (2) a motion to request/agree to a conference; and (3) a motion to authorize the Chair to appoint conferees. The Senate routinely does this by UC [unanimous consent], but if a Senator objects the Senate must debate each step and all 3 motions may be filibustered (requiring a cloture vote to end debate)."<br /><br />Considering the already lethargic pace of health care reform, this is an illuminating reminder of how Republican's are putting their energy into dragging out the process rather than affecting the legislation.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-71044597459663693952009-11-28T21:39:00.000-08:002009-11-28T21:40:08.458-08:00GOP Needs Six Weeks To Debate Health Care Bill That All Republicans Will OpposeOriginal Link: <a href="http://www.huffingtonpost.com/2009/11/20/gop-needs-six-weeks-to-de_n_365870.html">http://www.huffingtonpost.com/2009/11/20/gop-needs-six-weeks-to-de_n_365870.html</a><br /><br />By Sam Stein<br /><br />Senate Minority Leader Mitch McConnell (R-KY) argued last Sunday that Republicans deserve at least six additional weeks to consider health care reform before letting the bill come to a vote. But on Friday, his top lieutenant said the entire GOP has already made up its mind on the legislation.<br /><br />Appearing on Fox News Friday morning, Sen. Jon Kyl (R-Ariz.) insisted that "every single Republican will oppose" even debating health care reform because "they know it will only get worse."<br /><br />"None of the things that they like about the bill will get better; and the things they object to would take 60 votes to change, and they know they're not going to get 60 votes to amend the bill to their liking," said Kyl, the minority whip in the Senate.<br /><br />The opposition isn't unexpected. For some time it's been clear that Democrats would be getting either one (Sen. Olympia Snowe of Maine) or no Republican Senate votes on health care legislation. But Kyl's prophecy of across-the-board opposition does seem to undercut that other GOP tactic. Why do Senate Republicans need six weeks to debate and consider the legislation if they're already determined to vote against it?<br /><br />"We know it's been in Harry Reid's office for six weeks and the other 99 senators haven't seen it," McConnell told "Fox News Sunday" last week. "I think we ought to at least have as much time for the other 99 senators and all of the American people to take a look at this bill as Majority Leader Reid has had."<br /><br />And why, for that matter, are Senate Republicans complaining about a limited three-day window to read the legislation if they have already come to a final verdict on its contents?<br /><br />"We're now going to have about 72 hours to figure this out," said Sen. Judd Gregg (R-NH), during a speech on the Senate floor on Friday. "But I know this much -- when a bill costs $2 billion a page and when it includes language like that, it's something that we should spend some time on. And this bill's being rushed, and it shouldn't be rushed."Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-18249366164029179572009-11-28T21:15:00.000-08:002009-11-28T21:17:15.275-08:00GOPers Decrying "Socialized Medicine" Go To Govt. Hospital For SurgeriesOriginal Link: http://www.huffingtonpost.com/2009/09/02/gopers-decrying-socialize_n_275196.html<br /><br />By Sam Stein<br /><br />Republicans in Congress have raised the specter of a bloated, "socialized," bureaucrat-run nightmare of a health care system as a means of undermining the White House's effort at a systematic overhaul. And yet, as Democratic sources are now pointing out, when medical crisis hit close to home, many of these same officials turned to a government-run hospital for their own intensive care and difficult surgeries.<br /><br />Take, for instance, Senate Minority Leader Mitch McConnell (R-Ky.), who warned that "a government takeover of health care" would "take away the care that people already have [and] are perfectly satisfied with." In its place, the senator said, would be "a system in which care and treatment will be either delayed or denied."<br /><br />That was July 2009. In February 2003, McConnell actually went to one of those government-run institutions (where treatment is, apparently, "either delayed or denied") for a procedure of his own. The Kentucky Republican traveled to the National Naval Medical Center in Bethesda, Maryland, to have an elective coronary artery bypass surgery after it had been revealed that he had arterial blockages.<br /><br />Also known as Bethesda Naval Hospital, the National Naval Medical Center is the premier branch of the United States Navy's system of medical centers -- as in, the government runs it. It's also the place where elected officials of all ideological stripes and political branches often go get surgery performed. Indeed, members of Congress pay an annual fee for the privilege of getting treatment at Bethesda Naval Hospital or, for that matter, Walter Reed Army Medical Center. It is, as longtime Democrat Martin Frost wrote for Politico, "like belonging to an HMO." Only, in these cases, the surgery is conducted at a public facility.<br /><br />None of this has stopped some of the same officials who have taken advantage of this congressional perk from railing against the intrusiveness and inefficiencies of a health care system with greater government involvement.<br /><br />Senator John McCain, (R-Ariz.) for instance, recently applauded the town hall protesters who were, in his words, revolting "against a government-run health system." That was August 2009. In May of 2000, McCain had surgery at the Bethesda Naval Hospital to remove a potentially lethal melanoma from his left temple.<br /><br />Senator Kit Bond (R-Mo.), meanwhile, has warned of the rationing of care, expensive costs, and reduced quality that would come under a government-run health care plan. In April 2003, however, he traveled to Bethesda Naval Hospital to undergo hip replacement surgery in an attempt to alleviate degenerative arthritis in his left hip.<br /><br />Senator George Voinovich, (R-Ohio), has declared that a "bureaucratic Washington-run government plan is not the answer" to the nation's health care needs. In June 2003, the Ohio Republican (who is retiring from the Senate in 2010) went to Bethesda Naval Hospital to have a pacemaker installed.<br /><br />The best example of this double standard, however, may be Rep. Roy Blunt, (R-Mo.) who compared government-run health care to an elephant, stomping on and killing off the mice of the private insurance industry.<br /><br />Blunt has had two procedures done at Bethesda Naval Hospital. The first came in July 2002, when he underwent surgery to remove his left kidney. The second came a year later, when he underwent prostate surgery after being diagnosed with early-stage prostate cancer.<br /><br />To be strictly accurate, there is an important distinction between a government-run hospital and a government-run health insurance agency. The public plan, which is the focus of much of the GOP's ire, is the latter. Bethesda Naval Hospital is the former.<br /><br />But conservatives have long used the notion of "socialized medicine" to defeat health care reform efforts -- even though when it comes to the flagship Naval Hospital just miles away, the worries about bureaucratic nightmares, low quality care, and long lines seem to be wiped away.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-3433204821071249762009-11-27T22:54:00.000-08:002009-11-27T22:55:20.796-08:00Murdoch Is Big Muscle Behind Fraudulent Astro TurfersOrigina Link: http://www.alternet.org/politics/142068/utilizing_public_airwaves%2C_media_mogul_murdoch_is_big_muscle_behind_fraudulent_astro_turfers/?page=entire<br /><br />By Adele M. Stan<br /><br />Burrowing inside the radical right's gathering of astroturfers and mouthpieces, AlterNet Reporter Adele Stan discovers what makes the anti-health reform machine tick.<br /><br />As nearly 2,000 progressives made their way last weekend to Pittsburgh for the annual Netroots Nation conference, the right made its stand in the same town with a conference called RightOnline, sponsored by Americans for Prosperity, a group that has gained notoriety for its involvement in organizing seemingly grassroots opposition to health-care reform.<br /><br />Billed as a counterconference to the Netroots Nation gathering of bloggers and online activists, RightOnline convened at a Sheraton hotel, offering a few 101-level workshops on new technologies like Twitter and YouTube.<br /><br />But the highlight of the conference was a red-meat program of speakers designed for a crowd of older activists who were hungry to hear myriad myths about the myriad forms of oppression in store for them if they don't stop the purportedly nefarious agenda of President Barack Obama.<br /><br />"Great news to report," AFP policy director and FoxForum contributor Phil Kerpen told the crowd. "Our numbers are up; Netroots Nation's numbers are down; we are catching up to them online."<br /><br />AFP claimed to draw 600 participants to RightOnline; Netroots actually drew about the same number of registrants as last year, according to conference organizer Raven Brooks -- about 1,900.<br /><br />Americans for Prosperity is by far the slickest of the astroturf groups organizing disgruntled right-wingers of the "regular folks" variety into shouting mobs at town-hall meetings focused on health-care reform.<br /><br />Sponsored in the past, according to SourceWatch, by the oil interests of Koch Industries, and a foundation headed by notorious right-wing financier Richard Mellon Scaife, AFP is wedding public fear about health-care reform -- fear it has done its best to stoke -- to a larger agenda embraced by ground-level activists that includes opposition to the cap-and-trade climate bill and Internet neutrality.<br /><br />Indeed, AFP's exploitation of fears about health-care reform appear to be merely a means to a larger end.<br /><br />Think these guys are appeased by the administration's talk of dumping the public health insurance option from the health-care reform bills currently working their way through Congress?<br /><br />Phil Kerpen all but said he'd rather the plan be kept in the bill, the better to organize against.<br /><br />"I'm scared that they're gonna take the public option out of this bill," Kerpen told the crowd, "and we're gonna be caught a little off-guard if we're not ready. Because, frankly, without the public option, it's not socialism anymore, but it's pretty close to fascism. It's a corporatist kind of thing. … So don't just focus on the public option. We have to kill this whole plan."<br /><br />Not Your Father's Astroturf<br /><br />Americans for Prosperity is, perhaps, the brightest and shiniest of the astroturf organizations responsible for the misinformed, disruptive and sometimes dangerous citizens who continue to turn up at town hall meetings conducted by members of Congress over the August recess. All count themselves as members of the Tea Party movement of anti-tax activists.<br /><br />His activists tour the country in a big, luxury motor coach painted in red, white and blue, sporting the slogan, "Keep Your Hands Off My Health Care!" With its spiffy graphics and tech-savvy persona, the aesthetics of Americans for Prosperity are reminiscent of the Christian Coalition events and materials of the mid-1990s.<br /><br />That's not surprising, given that AFP President Tim Phillips is a former business partner of Ralph Reed, who, as its executive director, brought the Christian Coalition to national prominence. Phillips and Reed continue to work in tandem.<br /><br />Although Reed went on to ignominy for his involvement in the Jack Abramoff lobbyist scandal, he is now attempting a comeback with a new organization, the Faith and Freedom Coalition.<br /><br />While Phillips was the master of ceremonies at the RightOnline event, Reed shared the stage with Dick Armey at an anti-health-care rally in Atlanta that was co-sponsored by Americans for Prosperity.<br /><br />By comparison, the other astroturfing operations AlterNet covered in previous reporting -- all of which count themselves as part of the Tea Party movement -- look rough around the edges.<br /><br />FreedomWorks, led by former House Majority Leader Dick Armey, R-Texas, is basically your father's astroturfing outfit, rallying the grumpy-old-man crowd to great effect on behalf of Armey's former K Street clients.<br /><br />ResistNet, the "official community" of Grassfire.org, is a home-made-looking meeting place for gun enthusiasts, militia types, birthers and the most ardent of the Obama-is-Hitler contingent.<br /><br />Glenn Beck's 9-12 Project draws from the audience for the derangement he displays on his Fox News Channel program, but he has closed down the comments section of his site ever since rowdies at a Tampa town hall that turned violent mentioned Beck as their inspiration to the local newspaper. (However, a link to a schedule of town hall events does appear on the 9-12 Project's home page.)<br /><br />Of course, there's plenty of crossover among the constituencies of the various sites, and plenty of links among the players.<br /><br />For instance, Sen. Jim DeMint, R-S.C., who famously predicted that health-care reform would be Obama's "Waterloo," appeared in the video that opened the RightOnline general session. His endorsement also graces the Grassfire.org Web site, as do the plaudits of Rep. Mike Pence, R-Ind., chairman of the Republican Caucus, who sent in a video message to the RightOnline crowd.<br /><br />Phillips, the AFP president, worked on Armey's political campaigns.<br /><br />While Fox News has hardly been secretive about its involvement in the anti-health care cause, the reach of its parent company, Rupert Murdoch's News Corp., goes further than the utterances of its pundits over the airwaves, or Beck's 9-12 Project.<br /><br />The Americans for Prosperity roster of RightOnline conference speakers was heavily populated by those who toil for Murdoch -- fully one-third of the list of 15 -- in addition to two others who have links to Murdoch.<br /><br />Fox News contributors Michelle Malkin and Jim Pinkerton addressed the crowd, as did columnists John Fund and Stephen Moore of the Wall Street Journal, another News Corp. property. AFP Policy Director Kerpen writes a column for FoxNews.com. Pittsburgh radio host Glen Meakem works for a Clear Channel station whose featured programming includes the Wall Street Journal Report, Glenn Beck and Sean Hannity. Ronald Kessler writes for NewsMax, which was founded by a former reporter for the New York Post, yet another News Corp.entity.<br /><br />When I asked Phillips about the Fox/Wall Street Journal connection to his organization, he looked surprised.<br /><br />"We have someone from Fox News?" he asked.<br /><br />"Well, Fox News Channel contributors," I replied.<br /><br />"OK. So, they're not on the payroll of Fox News. Do any of those guys get money from Fox News?"<br /><br />He's asking me? "I don't know if they're paid by Fox," I said, "but I assume that they are. Do you have a partnership with Rupert Murdoch?"<br /><br />"Not at all, not at all," he replied with a little laugh. "The fact is, the Wall Street Journal's my favorite newspaper; I love those guys. I like what they write. I look at Steve Moore and John Fund, and those are two of the smartest guys. They're also entertaining, in addition to being philosophically sound.<br /><br />"I don't know if you've read The End of Prosperity, Arthur Laffer and Steve Moore's book; it's one of my favorite books of the last three or four years. I've really found it to be incisive, so I really like those guys. But there's no partnership -- financially, understood, or anything else."<br /><br />I checked with the Fox News Washington bureau, and indeed Malkin and Pinkerton are paid by Fox, and are branded by the news channel, listed on the "talent" page of its Web site. Fund and Moore are full-time employees of the Wall Street Journal, and AFP's Kerpen has a weekly platform on Fox's well-traveled Web site.<br /><br />What Murdoch Hath Wrought<br /><br />In the cable and broadcast spectrum occupied by Fox News Channel and Fox Television, Murdoch operates through a public trust, as do all cable and broadcast outlets.<br /><br />As much as he hates to share, Murdoch is using the common property of the United States to turn out mobs at town hall events for the purpose of intimidating members of Congress and spreading disinformation about what's in the health care bills.<br /><br />There's nothing unusual about media properties whose editorial and opinion content reflects the views of the owner. What's new here is Murdoch's use of his media empire as an organizing tool in a campaign designed not only to affect several very particular pieces of legislation, but concocted to "break," in the words of DeMint, a U.S. president.<br /><br />While Phillips may have been a little shy about his kinship with Murdoch and his minions, the minions themselves were not.<br /><br />Speaker after speaker railed against "the left's" campaign against Beck's show (in the wake of Beck calling Obama a racist and worse), and Pinkerton and Moore cheer-led for their employer.<br /><br />"I should say that, for 13 years now, it's been my enormous privilege to work at Fox News," Pinkerton said from the podium, and although I'm proud of the work that I'm a very small part of that Fox does … I'm watching the effort to boycott Glenn Beck, and I think that it's telling you that it's just a part of the ongoing efforts that you're going to be seeing against Fox as the federal government does its best to squelch what Barack Obama said was his greatest source of pain in the media was Fox."<br /><br />Likewise, the Wall Street Journal's Moore asked the audience, "What would we do without Fox News and the Wall Street Journal?"<br /><br />But Pinkerton couldn't let it rest: He kept naming Fox as an integral player in the Tea Party movement, lauding the role of cable television in showing video of raucous town hall events. "This has been very much a TV struggle," he said.<br /><br />He urged activists in the online community to "work with Fox," and cited a Fox-manufactured controversy about people receiving unsolicited e-mails from the White House as a "major story."<br /><br />"Keep it up; we'll win," he said.<br /><br />The Murdoch Agenda<br /><br />As I listened to the speakers, a I took note of a curious phenomenon. Some bashed the pharmaceutical industry for its reported deal with the White House on health-care reform legislation; others took aim at the health insurance industry.<br /><br />"The insurance industry is spending tens of millions of dollars supporting this," said Phil Kerpen of FoxNews.com and AFP. "Why? Because they know that public option is gonna come out sometime in September, and once the public option is out, they're going to get government-guaranteed profits for life.<br /><br />"We're going to be forced by law to buy their product, and it's going to be subsidized with our tax dollars. Why not support that? That's a dream for them. Of course they're … supporting it; so are the pharmaceutical companies; they're all supporting it."<br /><br />Kerpen also asserted that the health-care bill would build "a massive new bureaucracy of federal workers that will be unionized and have control over our lives." Scary. Unionized workers.<br /><br />In his opening remarks, Phillips included "card check" in his list of legislation his followers need to defeat, referring to the Employee Free Choice Act, which would make it easier for workers to unionize.<br /><br />It occurred to me that liberal analysts like me have been too literal as we have tried to assess just which corporate interests are behind the mobs. (Of with groups like AFP, we have only a snapshot of where their money comes from; they are not required by law to publicly disclose that information.)<br /><br />The easy assumption is that the resistance all comes from the health-care industry, since it will be the most directly affected by the bill. But that's thinking too small.<br /><br />This is about something much bigger -- Very Big Business writ large, and amplified and organized by one very big media mogul.<br /><br />Murdoch's personal political views appear to come down to three: he's against regulation of virtually any kind, he hates taxes and he's a union-buster, famous for breaking the unions at British newspapers he owns.<br /><br />In not so many words, Kerpen essentially spelled out the Murdoch agenda when explaining to the AFP crowd why health-care reform, even without a public option, is a bad thing: "They're going to mandate by law that employers must provide health insurance. They're going to mandate by law that every individual must buy it. They're going to massively subsidize it from taxpayers. They're going to regulate it every single way to micromanage it."<br /><br />A Research 2000 poll released this week by the Daily Kos (the organization that sponsored Netroots Nation) found that a whopping 65 percent of Republicans believe Fox to be a reliable news source, and that 74 percent of Republicans never watch CNN, while 89 percent never watch MSNBC.<br /><br />This week's NBC/Wall Street Journal poll shows that those who believe the lies promoted about health-care reform legislation -- the tropes that it includes taxpayer-funded abortion and mandatory end-of-life counseling -- are overwhelmingly Republican. Rachel Maddow reported [video] that 75 percent of those who say they believe the Democratic health-care plan will limit care to the elderly watch Fox News.<br /><br />But a disinformation campaign by which viewers absorb twisted "facts" is not enough for Murdoch. He's sending his minions out to rallies like AFP's to spread the fear. And with his 9-12 Project, Beck is Murdoch's community organizer, rallying the troops to turn up at events where they have been known to misbehave.<br /><br />I doubt Murdoch cares how many sponsors Beck's show loses as a result of his rants; in terms of the greater dividends he's bound to reap from the derailing of health care, Net neutrality and energy reform, he can afford to keep Beck on as a loss leader.<br /><br />Real People Told Real Lies<br /><br />Throughout the RightOnline program, liberals and mainstream media were derided for characterizing town-hall disrupting tea-baggers as an angry mob. Sen. Majority Leader Harry Reid, D-Nev., was predictably derided for his description of movement leaders as "evilmongers."<br /><br />But that's just grist for the mill compared to the stunning displays of deception trotted out in plain view before the Tea Party enthusiasts.<br /><br />Phillips opened the program suggesting that a White House request for Americans to submit, through an e-mail address, questionable claims made about the health-care legislation in media or elsewhere was a Nixonian "enemies list" operation, "asking Americans to turn in other Americans for fishy e-mails …"<br /><br />"I hope and encourage you to go to that Web site and turn in yourself," he added.<br /><br />Glen Meakem, the local radio host, used his time on the stage to promote an outright lie: He told the audience that page 425 of the House bill required seniors to meet every five years with a government official for mandatory counseling on "dying with dignity." The bill says no such thing; go to page 425 [PDF] yourself and have a look.<br /><br />As has oft been repeated, what the bill does offer on end-of-life issues, should one choose it, is coverage for a paid counseling session with your doctor or health-care practitioner, for which senior citizens are eligible every five years.<br /><br />But Meakem just ignores that, claiming that the bill‘s alleged "compulsory" counseling would require the hiring of 7,000 bureaucrats before whom 55,000 seniors per day would be required to sit and reveal their plans for how they would like to die.<br /><br />"Imagine the assembly line," he said. "Imagine what a quiet, private, intimate discussion that would be -- a bureaucratic paper chase with government officials, and it would be an incredible, incredible violation of our privacy."<br /><br />Yet, the exposure by progressive journalists of the right's astroturfing seemed to have movement leaders on the defensive, assuring their troops that they were indeed real people.<br /><br />And they are. They're frightened, misinformed real people who have been organized by corporate interests.<br /><br />The night before the general session, at the RightOnline dinner (which featured Pennsylvania Senate GOP candidate Pat Toomey as its speaker), I sat next to a lovely woman from Pittsburgh named Linda. She had never before been involved in politics, but the Obama plan, she said, had moved her. She was almost as distrustful of the GOP as she was of the Democrats, she said, on account of George H.W. Bush's embrace of, "what was that world government thing?"<br /><br />"Oh, the New World Order?" I asked.<br /><br />"Yes, that, and that, oh, I can't remember the name of it, Tri--"<br /><br />"The Tri-Lateral Commission?" I offered.<br /><br />"That's it," she replied. "The Tri-Lateral Commission."<br /><br />Still, she would rather have the Republicans than Obama's socialism, she told me.<br /><br />Or there was the woman waiting in line to get her copy of Michelle Malkin's book, The Culture of Corruption, signed by the author.<br /><br />She didn't want to give me an on-the-record interview, but I can tell you this much: Her family owns a local manufacturing business, and she's convinced that "the America I know is disappearing," and that Obama is intent on turning the United States into "a Marxist nation."<br /><br />Like most of the participants in the Saturday session, the women appeared to be well over 40.<br /><br />Dog Whistles For Violence<br /><br />Malkin, Fox News contributor and founder of Hot Air, delivered the keynote to the RightOnline general session. Malkin was the only nonwhite person to grace the RightOnline podium, and one of two women.<br /><br />A practiced speaker, Malkin's tone was by turns snide and gracious as she assured the crowd that they were doing the work of freedom. Like other conference speakers, she counseled RightOnline attendees to not be demoralized by their relative lack of numbers when compared to progressives.<br /><br />"Don't worry about tallying up how many people are at the Nutroots conference versus this conference," told the audience. "That is not the metric; the metric is, what is the White House worried about right now? Are they worried about the Nutroots, or are they worried about you? Who are they trying to silence? Them or you?"<br /><br />Then Malkin took her exhortation one step further. "On the White House health-care takeover plan, you have the majority running scared. Think about this, contemplate this: Democrat lawmakers on recess now are hiding from their constituents, in SEIU offices."<br /><br />The crowd began to shout. "Cowards!" several yelled.<br /><br />It was at an event focused on health-care reform sponsored by Service Employees International Union in Tampa that Tea Party crowds tried to force their way into the forum after the room in which was held was already to capacity. A scuffle ensued.<br /><br />Earlier in the RightOnline conference, Rep. Tom Price, R-Ga., addressing the crowd in a video message, expressed a similar sentiment, in the words of Revolutionary War hero Samuel Adams: "It doesn't take a majority to prevail," Price said, "but an irate and tireless minority …"<br /><br />Or sometimes, an angry mob.<br /><br />As AlterNet reported earlier this week, Americans for Prosperity opened its general session with Joe Wurzelbacher, a.k.a., Joe the Plumber, telling the crowd that there was a time when he would have taken politicians like House Speaker Rep. Nancy Pelosi, D-Calif., "out behind the woodshed and beat the livin' tar out of ‘em." The crowd roared.<br /><br />In one instance, the iconography of the militia-inspired "freedom movement" bubbled up in the exhibition hall outside the plenary session. A group called American Majority offered for sale posters featuring the coiled snake of the Revolutionary War Gadsen flag, which has been appropriated by organized gun enthusiasts.<br /><br />The flag's iconic coiled snake graced the sign held by the man with a gun strapped to his leg outside the New Hampshire high school where Obama conducted a forum on health-care reform earlier this month.<br /><br />Were it not for repeated instances of weaponry brought into or near health-care town-hall meetings, and death threats made on members of Congress conducting town halls, it might be easier to dismiss remarks such as Malkin's as just so much rhetoric.<br /><br />What's worse, it has been given the seal of approval by mainstream Republicans. Appearing on the Aug. 17 edition of NBC's Meet the Press -- the day after the RightOnline conference closed -- Sen. Tom Coburn of Oklahoma told host David Gregory that members of Congress have "earned" the physically threatening consternation they are experiencing.<br /><br />Denial<br /><br />Lean and energetic, AFP President Tim Phillips sports an obvious dye-job on his full head of hair and exudes the sort of studied affability common among leaders of the religious right. But there's an unmistakable hardness around his eyes and in the set of his jaw.<br /><br />After the general session concluded, I caught Phillips in the hotel lobby and asked him to respond to the threats of violence that have surrounded some town-hall meetings dedicated to health-care reform.<br /><br />"Do you see any violence here today? I see the most kind, warm, friendly people in America," he said. "I mean, there's 600 people here; there's no talk of negative stuff or nasty stuff or attacking anyone. It's about being civil. That's how you win: by being civil"<br /><br />As if I hadn't just sat through Malkin's less-than-civil speech.<br /><br />I mentioned ResistNet, an AFP partner in the Tea Party coalition, whose site abounds with racist and violent material.<br /><br />"I can only speak for Americans for Prosperity," he replied, "and we've got over 800,000 members now, and what you heard today is what you'll hear anywhere we are. … With all the media that's out there today, if you're trying to play games with this audience being one way, and this audience being -- you get caught, and we're not going to do that."<br /><br />Malkin was no more philosophical when I asked her the same question.<br /><br />"Look, I think we always have to be concerned about outliers and individual lone nuts out there, whatever their political ideology is," she said, "and certainly in the wake of some of these cases where there have been people who have claimed to be right-wingers -- or at least that's how it's been portrayed -- that ended up perpetrating violence.<br /><br />"I mean, I condemn any violence in the name of political ideology. But the White House and the Democrat (sic) National Committee, and a lot of these liberal bloggers I think have completely overreached in tarring the entire movement of people who have risen up since the stimulus bill. How long -- you've been here all day, I take it? Do you fear for your life around these people?"<br /><br />Well, no, I didn't. But they were highly unlikely to misbehave in a place where they were surrounded by their own kind. Malkin then went on to say that there had been a "whitewashing" of the degree of assassination threats against President George W. Bush, and she dismissed the Southern Poverty Law Center report that says the militia movement is on the rise.<br /><br />Joe the Plumber repeated his "woodshed" line to me, justifying it by saying that Congress has "been lyin' to us for years." However, Wurzelbacher said, he didn't advocate violence.<br /><br />Well, then, what about the sober Wall Street Journal columnist and Murdoch employee, John Fund?<br /><br />"We heard these same concerns, and they certainly need to be taken seriously," he said, "during the Social Security protests in 2005, and during the anti-war protests in 2--"<br /><br />I interrupted him. "Yeah, but you didn't have a guy showin' up with a gun strapped to his leg," I said.<br /><br />"I can send you the articles on that," he replied. "Anti-war protesters that basically stormed speakers' rostrums, silenced speakers. I was at Columbia University when two speakers were silenced.<br /><br />"[O]bviously, groups should control their members, but most of the people who do this on the left and right are rogue actors. So, you can discourage them, and they should be discouraged, but, you know, democracy has costs. And one of them is that on both the left and the right, you're going to have people who misbehave.<br /><br />"If they violate the law, they should be punished, if they disrupt meetings, they should be prevented from doing that, but this is part of democracy."<br /><br />I gave Fund my e-mail address; I'm still waiting for those articles.<br /><br />In New Hampshire, the armed man who sought to greet Obama carried a sign that read, "It Is Time to Water the Tree of Liberty." The reference was to a Thomas Jefferson quote -- one adored by the so-called freedom movement: "The tree of liberty must be refreshed, from time to time, with the blood of patriots and tyrants."<br /><br />As Phillips moved among his crowd of gentle, peaceful people, his former business partner, Ralph Reed, took the stage in Atlanta at the anti-health-care rally co-sponsored by Americans for Prosperity.<br /><br />Where the New Hampshire gunslinger drew from the first part of Jefferson's quote, Reed picked from the second:<br /><br />"Our right to protest has been purchased with the blood of patriots who paid the ultimate price so that we could be free men and women and have the ability to petition our government," he said. "We will not be intimidated, we will not be silenced, and we will not go away."Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-90725230576932060372009-11-13T14:59:00.000-08:002009-11-13T15:04:37.776-08:00Credit Card Companies Face a Grim FutureOriginal Link: <a href="http://www.minyanville.com/articles/credit-card-companies-spending-consumers-unemployment-delinquincies-minyanville/index/a/25427">http://www.minyanville.com/articles/credit-card-companies-spending-consumers-unemployment-delinquincies-minyanville/index/a/25427</a><br /><br />By Josh Lipton<br /><br />The past quarter century was a fun one for the American consumer. But after all that borrowing and spending, consumers have re-discovered the benefits of thrift and prudence. This is good news for personal balance sheets, but bad news for credit card companies.<br /><br />In a recent report, Fitch Ratings forecast that US credit card issuers will continue suffering with respect to their earnings over the near term as a result of the lousy labor market, bankruptcies, and losses.<br /><br />The report, as summarized here for us by the gang at Zacks Equity Research, notes that major credit card issuers are still dealing with tough losses as the US unemployment rate hurdled over 10%.<br /><br />“Also, as it is expected that the rate will remain above 10% through 2010, consumers will increasingly fall behind on payments,” write the crew at Zacks. “As a result, the losses of the credit card issuers could worsen further.”<br /><br />Fitch’s rating outlooks are negative on the less diversified credit card companies, which are at risk of a downgrade. That hit list includes: Capital One Financial Corporation (COF), American Express Company (AXP), and Discover Financial Services (DFS).<br /><br />According to Fitch, prime credit card delinquencies of 60 days or more climbed 16 basis points to 4.22% in October. The rating agency forecasts higher loss rates in 2010.<br /><br />Additionally, more trouble for these companies is coming in the form of the Credit Card Accountability, Responsibility, and Disclosure law signed by President Barack Obama in May 2009.<br /><br />Key components of the act include an inability to raise rates on existing card balances, a requirement to maintain promotional rates for at least six months, and a restriction on fees for subprime, low limit cards. See also The Gall in Your Credit Card's Fine Print.<br /><br />Most of the new requirements will take effect in February 2010.<br /><br />At the same time, write the analysts at Zack’s, consumers have been transitioning from credit cards to debit cards (See Seven Ways to Avoid the Debit Card Blues). So the credit card companies don’t have much room for improvement until the economy starts to enjoy a sustainable recovery.<br /><br />But there are more than just near-term speed bumps for these companies. Strategists say these shops are getting squeezed and that’s a headwind they could face for some time.<br /><br />The models and analyses of these companies, so these market pros write, assumed that the borrowing-and-spending binge in the US would go on forever.<br /><br />However, those go-go years came to a screeching halt as unemployment spiked higher. The unemployment rate jumped to 10.2% in October from 9.8% in September, and is now just 60 basis points shy of taking out the post-World War II high of 10.8%.<br /><br />When will the unemployment picture begin to brighten?<br /><br />According to our central bankers, we shouldn’t hold our collective breaths.<br /><br />Dr. Janet Yellen, president of the Federal Reserve Bank of San Francisco, recently said that “unemployment could well stay high for several years to come… [and] our recovery is likely to feel like something well short of good times.”<br /><br />Her colleague, Mr. Dennis Lockhart, the president of the Federal Reserve Bank of Atlanta, didn’t sound too much more optimistic, saying that he expects to see “very slow net job gains… sometime next year.”<br /><br />Given that backdrop, it's thoroughly unsurprising that you and your neighbors are now more interested in saving rather than spending. No data captures that shift more clearly than the contraction in US consumer debt.<br /><br />In September, total consumer credit fell $14.8 billion, making it the eighth month in a row of debt repayment. This, say economists, is an unprecedented string of declines. See also Could You Get Cut Off From Credit?<br /><br />Dr. Gary Shilling, the noted economist, strategist, and founder of A. Gary Shilling & Company, recently told clients that he would steer far and wide of credit card companies.<br /><br />“Recent developments are virtually all negative for the credit card business now and for years to come,” Dr. Shilling wrote in his most recent research note, adding, “With the switch from a quarter century consumer borrowing-and-spending binge to a long run saving spree, the credit card business has moved from a growth industry to a laggard.”Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-46194778335335196712009-11-08T13:04:00.001-08:002009-11-08T13:04:57.131-08:00Mortgage crisis shows why financial regulation is neededOriginal Link: <a href="http://www.mcclatchydc.com/homepage/story/78026.html">http://www.mcclatchydc.com/homepage/story/78026.html</a><br /><br />By Kevin G. Hall<br /><br />Why didn't Wall Street firms tell potential investors that the bonds they were selling them were rotten? Why did their business partners, including subprime mortgage lenders, ignore glaring evidence that borrowers weren't qualified and give loans to virtually anyone with a heartbeat?<br /><br />The answer is simple: Because they could.<br /><br />In many cases, no law or regulation prohibited these firms from doing what they did. In others, former regulations that might have impeded them had been rolled back.<br /><br />After 30 years of a national political culture that damned government regulation and celebrated unfettered markets, the lions of Wall Street were free to practice the social Darwinism at the heart of their world — survival of the fittest, and the winner feasts on the spoils. Smaller players down the financial food chain played by the same ethics-free ethos.<br /><br />That's the back story to the U.S. financial crisis. At every turn where regulation was missing in action, the actors did the wrong thing, all along the long, interconnected trail of transactions that make up mortgage finance.<br /><br />"This crisis started one household at a time. As much as everyone wants to talk about derivatives and shadow markets and rating agencies, it started as one lousy mortgage sold to one family, repeated millions of times," said Elizabeth Warren, a Harvard University business law professor whose thinking has helped shape the regulatory overhaul efforts now under way in Congress.<br /><br />At the front of the chain were homeowners who took out loans with no documentation or little verification of income, bidding for more home than they could afford and betting that prices would keep rising forever. Mortgage brokers who originated their loans often received legal kickbacks from conscience-free lenders if they got borrowers into creative loans with high and adjusting interest rates.<br /><br />The mortgage brokers churned volume for big subprime lenders such as New Century Financial and Ameriquest Financial, both now defunct. They exploited a regulatory gap to become nonbank lenders, which were regulated only on the state level, and spottily at that.<br /><br />To address the "liar's loans" and mortgage-broker trickery, Congress is pushing to create a Consumer Financial Protection Agency. It would regulate consumer credit products such as mortgages, credit cards and payday loans.<br /><br />The agency would force lenders to offer products with simpler terms and greater disclosure. It would regulate consumer credit in the interest of borrowers, not lenders. This agency, Warren's brainchild, would address directly the weakened lending standards that Wall Street exploited, and which led to the financial crisis.<br /><br />"This is trying to move that to a world where there is light. One of the necessary ingredients is light, that people can track the terms of a deal, make comparisons among products, and not take on crazy risks," she said. "We've learned the consequence of too much risk aggregated in the system, it's brought us to our knees. The CFPA isn't about playing the Nanny State; it's giving customers the tools to protect themselves."<br /><br />Bad lending practices wouldn't have done so much damage, especially in places such as Florida and California, if they hadn't happened on such a large scale thanks to Goldman Sachs Group and its competitors.<br /><br />Investment banks such as Goldman took possession of the poor-quality mortgages and then, working in consultation with credit-rating agencies, packaged them into a highly rated securities backed by pools of mortgages for sale to big institutional investors.<br /><br />Many institutional investors — state pension funds and charitable endowments, among others — were required to purchase only the highest-rated securities. So it was imperative for the rating agencies to help their deep-pocketed investment bank clients attain top ratings for the mortgage-backed securities the banks issued.<br /><br />As recent history shows, top-rated securities quickly became junk as the housing market tanked and homeowners couldn't make their mortgage payments. The reputations of Goldman, its competitors, and rating agencies such as Moody's Investors Service, fell along with home prices.<br /><br />Because their sole mission is to provide investors with reliable signals about the risk they're assuming, the rating agencies' failure to score the securities accurately is particularly damning. They were supposed to keep investors in mind, even as they were paid to rate the bonds and mortgage securities by their issuers, such as Goldman.<br /><br />Congress is now addressing the role of investment banks and rating agencies. Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, on Oct. 27 introduced legislation that would force investment banks to retain 10 percent of whatever mortgage-backed securities they sell to investors. The banks thus would be forced to eat their own cooking.<br /><br />Frank's legislation also would require about 120 banks with assets valued above $10 billion to share the cost of closing down one of their brethren if necessary. That means that the cost of any future crisis would be borne by Goldman and other big banks, not taxpayers.<br /><br />Separate legislation revamping the regulation of credit rating agencies seeks to make it much harder for Goldman or any other "investment" bank to influence securities' ratings.<br /><br />During the housing boom, investment banks could withhold a preliminary rating from say, Moody's, while seeking a better rating from Standard & Poor's or Fitch Ratings. A bill passed Oct. 28 by Frank's committee would force Goldman or one of its rivals to publish any preliminary rating to prevent shopping around for better ratings.<br /><br />Robert Pozen, the chairman of MFS Investment Management, a large fund manager, and a former teacher at Harvard's business and law schools, thinks that requirement falls short.<br /><br />"I think that's a step in the right direction, but the reality is more of this is done before you get to the preliminary rating. Most of it is done where you have an information conversation with someone and that's worked out," Pozen said. "I think once you get to the preliminary rating stage, it's pretty far along. Most of the (questionable) stuff is done on a handshake pretty early in the process."<br /><br />Pozen favors having regulators appoint a consultant to assign rating agencies randomly to issuers of securities.<br /><br />One key component of the crisis isn't being addressed directly.<br /><br />The financial crisis was made possible in part by the late 1999 decision by the Clinton administration and a Republican-led Congress to roll back the Depression-era Glass-Steagall Act.<br /><br />This 1933 law prevented deposit-taking commercial banks from engaging in the securities business. The rollback allowed Bank of America, Citigroup and other large conventional banks to create massive and lucrative trading operations. They got deeply involved in complex financial instruments such as credit-default swaps that eventually threatened their core businesses and the global financial system.<br /><br />Former Federal Reserve Chairman Paul Volcker, who's advising the Obama administration, has called for a restoration of the Glass-Steagall's separation of commercial banks from more speculative investment banks.<br /><br />"There are deep-seated, almost unmanageable, conflicts of interest with normal banking relationships -- individuals, businesses, investment management clients seeking credit, underwriting and unbiased advisory services," Volcker wrote in September congressional testimony. "I also think we have learned enough about the challenges and distractions for management posed by the risks and complexities of highly diversified activities."<br /><br />Volcker's calls have gone unheeded, even by Obama, but Volcker recently picked up support from former Citigroup Chief Executive John Reed. In a letter to the New York Times, Reed supported Volcker's call to restore the Glass-Steagall protections.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-57993068591694550642009-11-07T21:05:00.000-08:002009-11-07T21:08:16.734-08:0010 of the Nuttiest Statements Elected Officials Have Made in the Health Care BattleOriginal Link: <a href="http://www.alternet.org/healthwellness/143790/10_of_the_nuttiest_statements_elected_officials_have_made_in_the_health_care_battle/">http://www.alternet.org/healthwellness/143790/10_of_the_nuttiest_statements_elected_officials_have_made_in_the_health_care_battle/</a><br /><br />By Joshua Holland<br /><br />Wild, over-the-top rhetoric and bizarre conspiracy theories about health reform aren't just coming from the right-wing blogs and talk-radio loudmouths.<br /><br />Even by the standards of our typically debased public discourse, one has to step back and marvel for a moment at the sheer, unmitigated craziness the debate over health care reform has elicited from the right wing.<br /><br />It hasn't been the usual conservative boilerplate -- blather about "tort reform" or dubious "analyses" predicting the latest proposal would break the budget and blow up the national debt. We've been treated to some truly extreme, and sometimes bizarre, arguments about American health care and even lied to about what the proposed health reform bills contained.<br /><br />We're accustomed to that kind of hyperbole from hate-radio and the conservative bloggers, but this summer it hasn't been limited to Rush Limbaugh fulminating about socialism or Glenn Beck weepily warning that the Dems' health care legislation are stealthy reparations for slavery.<br /><br />What makes the ocean of crazy surrounding this debate truly remarkable is that the overheated, ill-informed spew is also coming from the mouths of actual public officials, people tasked with creating legislation. National office holders -- not loopy local GOP party chairs, but people who supposedly represent the interests of entire congressional districts and earn a public salary -- have offered up months of bizarre tales about our health care system and the effort to reform it that are every bit as outlandish as anything scribbled on an overheated right-wing blog.<br /><br />The most charitable view is that some of the lawmakers who oppose reform most vehemently just have no clue what they're talking about. Sen. James Inhofe, R-Okla., whom some have dubbed "the dumbest senator of them all," suggested as much when asked what he didn't like about the reform bill.<br /><br />"I don't have to read it or know what's in it. I'm going to oppose it anyways," he told Grady County Express Star. According to the report, "information provided by news media have helped [Inhofe] become a staunch non-supporter of the bill." In other words, his opposition is firmly grounded in whatever he's picked up from the fair-and-balanced conservative media.<br /><br />Whether examples of dumb-as-a-box-of-rocks ignorance or intentional obfuscation, here are some of the craziest things that have been said about health care this summer by real-live elected officials.<br /><br />It's by no means comprehensive!<br /><br />1. Policy Terminated!<br /><br />The thing that makes the rhetoric against health care reform so outlandish is how divorced it is from reality.<br /><br />The Democrats' health care proposals, as any critic on the left can tell you, are rather compromised, incremental reforms that won't directly impact the vast majority of Americans who have decent health care already. It has a public insurance option, but only 1 in 50 Americans would be covered by it in 2019. According to the Congressional Budget Office, it wouldn't add to the deficit. It's moderate.<br /><br />Although the legislation is obviously significant, it's tough to portray as a radical and frightening shift in our health care system. So opponents in Congress have taken the novel approach of arguing against a bill that doesn't exist.<br /><br />Rep. Steve King, R-Iowa, warned that the House reform bill "cancels every [health insurance] policy" in America. "[House Speaker Nancy] Pelosi's agenda takes every [policy] away," King told MSNBC.<br /><br />Not to be outdone, Minnesota Republican Rep. Michele Bachmann -- always a favorite of lazy left-wing bloggers on the hunt for a gem -- told Fox News the House bill would make private insurance illegal.<br /><br />2. Health Care Crisis? What Health Care Crisis?<br /><br />One often hears that virtually everyone agrees that the American health care system has deep, deep problems, even as they disagree on exactly where the problems lie and how they should be fixed.<br /><br />But have you ever wondered who it is that is not counted among "virtually everyone"? Turns out they include some of Washington's most conservative lawmakers who insist that there is no problem and that the whole thing is just another liberal myth (like global warming, poverty or the war in Iraq).<br /><br />Another member of Congress named King -- Rep. Peter King, R-N.Y., -- told MSNBC that health care is "not a major issue among the American people." The Huffington Post points out that King based the claim on a poll that in fact found that Americans ranked the issue as the third most important, after jobs and the deficit.<br /><br />But Rep. Virginia Foxx, R-N.C., one of the craziest members of the House (and that's saying something), took the prize when she held a press conference to proclaim, "there are no Americans who don't have health care." Which would come as a surprise for the 46 million or so who lack coverage today.<br /><br />"We do have about 7.5 million Americans who want to purchase health insurance who can not afford it," she granted before urging people not to "give the government control of our lives."<br /><br />3. There's No Problem, and Nobody Cares About Health Care, but … Oh My God!<br /><br />If you're in the mood for consistency, the Republican caucus is probably not the place to look. Because while Reps. Foxx and Peter King were telling us everything's fine, and besides, nobody much cares about the issue, others were rending their hair over the profound injustice of it all.<br /><br />Sen. Lamar Alexander, R-Tenn., insisted that the Democrats' plans will inspire "a minor revolution" if lawmakers don't heed the confused outrage of the tea-partiers.<br /><br />"The intensity on this issue across the country is like nothing I've seen in a long, long time," he told CNN, adding that if health reforms squeak through, it'll "wreck our health care system and wreck the Democratic Party."<br /><br />Newt Gingrich (OK, he used to be an elected official) told Fox News that if the Dems used an obscure procedural maneuver to advance the legislation, "I think you'll have an extraordinary explosion both in the Senate and in the country." And Rep. Paul Broun, R-Ga., decided not to quibble and warned that the Dems' rather business-friendly incremental reforms would "destroy America as we know it today."<br /><br />With so much at stake, you have to credit Bachmann for reacting in the calm, measured tones for which she's become so well-known: "What we have to do today is make a covenant, to slit our wrists, be blood brothers on this thing. This will not pass. We will do whatever it takes to make sure this doesn't pass," she told an enthusiastic audience at a corporate think-tank.<br /><br />4. ET Get Health Insurance?<br /><br />Like some grotesque apparition from Orson Wells' War of the Worlds, aliens are descending upon us to defile our women and eat our health-insurance dollars!<br /><br />Only these are illegal aliens, and according to Iowa Republican King, a repeat offender, the Congressional Budget Office says almost 6 million unauthorized immigrants would be covered, gratis of course, under the Dems' health reform bill.<br /><br />Mind you he's not saying it -- he's just issuing press releases saying that the CBO is saying it!<br /><br />But, as it turns out, not so much. The truth is not only are the undocumented barred from receiving benefits by the legislation itself, but also by a variety of other laws already on the books. So did the CBO get it wrong? According to Factcheck.org:<br /><br />So, where does King get his 5.6 million figure? His press release says that the CBO projected that the uninsured would include 14.1 million illegal immigrants in 2019. The CBO's analysis of the House health care bill estimates that in 2019, 17 million would remain uninsured, "nearly half of whom would be unauthorized immigrants." This is where math comes in: Taking the 14.1 million illegal immigrants in 2019 and subtracting half of 17 million (8.5 million) gets you … 5.6 million illegal immigrants that have suddenly gained coverage, right? Actually, no. About half of illegal immigrants in the U.S. have health care coverage now.<br /><br />5. Rationing<br /><br />House Minority Leader John Boehner, R-Ohio, warned that health care "rationing" is inevitable. Sue Myrick, a cancer survivor and GOP representative from North Carolina, said she wouldn't have gotten the treatment she needed to beat her disease "under the government-run health care system they have in Canada and the United Kingdom," and cautioned people to "make no mistake, [the proposals in Congress] are all gateways to government-run health care."<br /><br />It's a common refrain. And one Canadians and British find pretty confusing.<br /><br />But the thing that makes this one so crazy is that rationing health care is the private insurance industry's entire business model. As Ezra Klein wrote in the Washington Post, "We Ration. We Ration. We Ration. We Ration."<br /><br />This is not an arguable proposition. It is not a difference of opinion or a conversation about semantics. We ration. We ration without discussion, remorse or concern. We ration health care the way we ration other goods: We make it too expensive for everyone to afford.<br /><br />The rationing meme did lead to hilarity when Investor's Business Daily ran an editorial arguing that physicist Stephen Hawking "wouldn't have a chance in the U.K., where the National Health Service would say the life of this brilliant man, because of his physical handicaps, is essentially worthless." Hawking, still a Brit last time he checked, responded: "I wouldn't be here today if it were not for the NHS. I have received a large amount of high-quality treatment without which I would not have survived."<br /><br />Less amusing was Sen. Chuck Grassley, R-Iowa, advancing the same nonsensical argument about the late Sen. Ted Kennedy, the Democrat from Massachusetts who fought hard for the Dems' plan before his death by cancer.<br /><br />6. Health Care Reform Is Just Like Terrorism, but Far Worse!<br /><br />North Carolina's Foxx is the gift that just never stops giving!<br /><br />Just this week, after having sworn that the status quo was just peachy, Foxx said that reform, on the other hand, would be just like an ax-murderer crawling into the room of a small, defenseless child in the dark of night, only much scarier.<br /><br />Creative Loafing, a Charlotte political blog, documented her exact phrasing:<br /><br />Give Foxx credit … she always ups the ante in her nutcase sweepstakes. Now, she's gone onto the House floor to declare that she and everyone in her district are living in fear (which, along with anger, seem to be the only two emotions right-wing extremists like Foxx have left at their disposal) and that health care reform is a more terrible threat to America than "any terrorist right now in any country." Um, thanks for that valuable insight, Congresswoman; maybe next time remember to take your meds before giving a public speech.<br /><br />In this week's crazy-off, Foxx has to compete with Sen. Joe Lieberman, I-Conn., bravely challenging the swine flu virus to choose a side -- either with us or with the terrorists -- but Foxx may have the edge.<br /><br />7. Health Care Reform Spawns Tenthers!<br /><br />You heard of "birthers" and probably know the health care debate has completed the cycle of life by giving us "deathers" (discussed below).<br /><br />But it's also spawned a generation of "tenthers" -- self-anointed right-wing constitutional scholars who insist that the Founding Fathers, no-doubt shilling for the insurance industry, enshrined ironclad prohibitions against the government helping Americans get halfway decent health care in the country's charter.<br /><br />And they include elected officials!<br /><br />The gist of their "argument" is that the 10th Amendment says that powers that aren't expressly given to the feds remain in the hands of the states. That's true, of course, but the Constitution doesn't grant the feds the power to build interstate highways, either. According to Think Progress:<br /><br />Tenther claims are far from the mainstream. In their world, landmark federal programs such as Medicare, Social Security, the federal highway system and rules regulating airplane safety are unconstitutional. In fact, the South "justified both secession and the Civil War on the theory that the Constitution is nothing more than a pact between sovereigns that each state is free to leave at will."<br /><br />Real constitutional scholars, of course, dismiss the claim as nonsense. But that hasn't kept a gaggle of Republican officials from jumping on the bandwagon, including Minnesota's Republican Gov. Tim Pawlenty -- a potential candidate for the White House in 2012; Texas Gov. Rick "the Hair" Perry, who toyed with the idea of secession before a crowd of "tea-party" activists earlier in the year; Sens. Jim Demint, R-S.C. and Tom Coburn, R-Okla.; and a handful of GOP House members. (Pawlenty later backed away from his statement.)<br /><br />How thoughtful are the tenthers? The Wall Street Journal offered a report about befuddled Georgia State Sen. Judson Hill proclaiming at a gathering of like-minded lawmakers, "The 10th Amendment protects us from such federal mandates." But when asked whether "the Commerce Clause of the U.S. Constitution, which grants Congress the right to regulate and enforce matters related to interstate commerce, would interfere with their plan," the Journal informs us "Hill could not say."<br /><br />When asked if "Medicare, which is government-run health care for seniors, would also then be unconstitutional," Hill was unsure.<br /><br />"That's a good question," he replied, "I don't know yet. We'll fight that battle when it comes before us."<br /><br />Medicare was established by an act of Congress in 1965.<br /><br />8. Astroturf Groups Are Just Like Revolutionary War Heroes … or Something<br /><br />The whole summer of outrage -- with its "tea parties," its loud displays of "patriotism" and dark whispers of revolution -- was nothing short of bizarre. Perhaps swept up in the fervor, Iowa's Steve King (who is now, I suppose, the champion), took to the floor of the House to warn of a "great diminishment of American freedom" if health care reform were to pass.<br /><br />"If the Founding Fathers could stand in here tonight," he said, "the tears would be running down their cheeks."<br /><br />He then compared busloads of protesters sent to Washington by deep-pocketed corporate lobbyists to Paul Revere.<br /><br />If King were a fictional character rather than an actual voting member of our legislature, he would be endlessly entertaining.<br /><br />9. When You Can't Oppose Something Rationally, Just Tell People It'll Kill 'Em!<br /><br />And when telling people that socialism is creeping up just over the horizon fails to stir up their ire, up the ante and promise them that reformers are bent on nothing short of killing off American citizens in order to control health costs. These are the "deathers."<br /><br />And in America, the media treat their outlandish charges as if they were a credible matter of debate.<br /><br />Begun by veteran wack-a-loon Betsy McCaughey, a former lieutenant governor of New York, the infamous "death panels" were soon being touted by GOP hitters like Boehner and Grassley, who said, "We should not have a government program that determines if you‘re going to pull the plug on Grandma."<br /><br />If you're reading this, you probably know the whole thing is nonsense, but some may not realize how benign the provision that started the death-panels nonsense really is. It just directs Medicare to pay doctors to consult with patients who want help drawing up a living will -- a way to control their own health care if they become incapacitated. That's it -- the deaths panels. That's the government taking decisions out of the hands of doctors and patients.<br /><br />Although it's been widely debunked, some prominent Republicans were still trying to push the "deather" story as recently as last week. And, as is so often the case, it turns out that many were for death panels before they were against them.<br /><br />10. Health Care Reform Will Kill the Republican Party … No, the Entire Two-Party System!<br /><br />House Speaker Nancy Pelosi, D-Calif., told reporters that the GOP fears the political ramifications of a decent reform bill being passed by the Dems. Saying that around 100,000 people in each congressional district would directly benefit from the House bill, Pelosi said, "Republicans know that passing real health care reform, meaningful health care reform for the American people, which is relevant to their lives [and] solves their problems, is politically powerful, and they must stop it."<br /><br />It's probably overstating the case, but it's a fairly straightforward analysis. In the hands of Sen. Orrin Hatch, R-Utah, however, it became darker, as he warned that passing a bill people actually liked would spell doom for our entire two-party system -- government as we know it. Describing the proposals in Congress as a "step-by-step approach to socialized medicine," Hatch told a conservative Web site:<br /><br />If they get there, then of course you're going to have a rough time, you're going to have a very rough time, having a two-party system in this country. Because almost everybody's going to say all we ever were, all we ever are, all we ever hope to be depends on the Democratic Party.<br /><br />So, Looking Forward to the Climate Change Debate Heating Up?<br /><br />Blather about a government takeover of health care with ashen-faced bureaucrats rationing out treatments has been ubiquitous among conservative elected officials, so much so that it almost seems a natural part of the discussion.<br /><br />But given the degree to which Democrats have been forced to water down their legislation to appease conservatives within their party, these memes really represent a mass psychosis in the literal sense, as in "a distorted or nonexistent sense of objective reality."<br /><br />Which might explain why 1 in 3 Americans trust congressional Republicans to deal with our health care mess and 4 percent of the electorate has a "great deal" of confidence in them on the issue.<br /><br />But the crazy charges flying around also help explain some of the oddly divided public opinion on health care reform. According to the latest polling, while 55 percent favor a public insurance option, 45 percent favor what they understand to be "Obama's" health care reforms.<br /><br />Given that the public option is the most controversial and hotly debated aspect of the health care bills in Congress, that would appear to confirm earlier polling, which basically found that most Americans just didn't have a firm handle on the proposals.<br /><br />We can laugh at the anti-reformers' hyperbole, but it does muddy the waters to at least a degree.<br /><br />Yet despite it all -- all the talk of death panels and losing our of liberty -- support for the public insurance plan has remained pretty steady over the past months, which has to make you wonder what the political landscape would look like if we were ever to have a serious, fact-grounded debate about health care reform in this country.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-54239529231001482952009-11-01T18:56:00.000-08:002009-11-01T18:57:00.998-08:00Tom Donohue and the Chamber of Open SecretsOriginal Link: <a href="http://www.afterdowningstreet.org/node/47158">http://www.afterdowningstreet.org/node/47158</a><br /><br />By David Swanson<br /><br />Pulling pranks on the U.S. Chamber of Commerce is just too easy. The Yes Men held a press conference this week pretending to speak for the chamber and fooled the journalists in the room, because "We are no longer going to promote the destruction of the earth's climate" is such a compelling position that it's very tempting to imagine that any human being could adopt it.<br /><br />But Tom Donohue and his chamber take the opposite position and have for years. William Kovacs, a senior vice president at the chamber, told the LA Times he'd like to stage a "Scopes monkey trial of the 21st century" to deny, not evolution, but human-made climate change.<br /><br />In place of William Jennings Bryan arguing "Ladies and gentlemen of the jury, I put it to you: if we were descended from monkeys, then why aren't I stupid, hirsute, and scratching my purple ass?" we would have a chamber lawyer advocating "My fellow believers in free enterprise, let me ask you: if liberal elites who claim we're heating up the planet are to be trusted, then I'm sure we'll all evolve into heat-loving lizards, so what's the worry?"<br /><br />How does one mock the U.S. Chamber of Commerce? Only by announcing an outbreak of sanity. Here are some other similar announcements I can imagine being made at phony press conferences:<br /><br />The U.S. Chamber of Commerce announces that minimum wage laws don't actually hurt workers.<br /><br />The U.S. Chamber of Commerce concludes that deregulating financial industries does not really create jobs.<br /><br />The U.S. Chamber of Commerce announces that the right to unionize is not, in truth, an infringement on workers' rights.<br /><br />The U.S. Chamber of Commerce announces that the Family and Medical Leave Act has not, as it turns out, destroyed families.<br /><br />The U.S. Chamber of Commerce announces its support for healthcare as a human right.<br /><br />The U.S. Chamber of Commerce concludes that the deregulation that allowed the collapse of Wall Street will not actually be best remedied by more of the same.<br /><br />A U.S. Chamber of Commerce report finds that bailing out bankers is not, strictly speaking, free enterprise after all.<br /><br />The U.S. Chamber of Commerce now opposes tax breaks for the off-shoring of jobs as detrimental to local job creation.<br /><br />The U.S. Chamber of Commerce is no longer proud of having gutted a legal settlement for tobacco victims.<br /><br />The U.S. Chamber of Commerce discovers that corporations are not homo sapiens.<br /><br />A U.S. Chamber of Commerce study finds that restricting the bribing of political candidates does not infringe on our freedom of speech.<br /><br />The U.S. Chamber of Commerce announces that funding campaigns to defeat majority views in elections, courts, legislatures, and presidential actions does not actually advance democracy.<br /><br />All of these announcements and breakthroughs would, of course, line up with the overwhelming majority understanding in the United States. It would be easy to believe that the chamber meant them. But these are all announcements that only the Yes Men or other pranksters would make.<br /><br />I'm working with a coalition of groups at http://stopthechamber.org and have been reading up on just how crazy and just how massive this chamber is. It's not your local or state chamber of commerce. Those are not chapters of a national entity, and they often oppose what it is doing. The U.S. Chamber of Commerce is a major force for the rightwingiest right-wing positions. It buys ads, it makes campaign "contributions", it lobbies, it sues, it presents court arguments, it runs a "think tank", it funds front groups that attack political candidates, and it brags about how much money it spends on activities it never reports to the government as legally required.<br /><br />The chamber promoted financial deregulation and is now pouring tens of millions of dollars into a campaign to oppose any regulation. The chamber claims, absurdly, that its purpose is to create jobs. How does one parody that? Only be falsely announcing the opposite. There's no other way it can be done. Imposing stiffer regulations on Wall Street is backed by over three-quarters of Americans, at least prior to the chamber's new ad campaign.<br /><br />I used to work with ACORN on local living wage and minimum wage campaigns, and the U.S. Chamber of Commerce was our most powerful adversary, swooping in and taking us to court after we passed higher standards through public votes. Why was New Orleans so poor and ill-equipped when Hurricane Katrina hit? One reason is that the chamber led a successful effort to overturn a minimum wage law that we had put in place. The chamber has run ads against the Employee Free Choice Act claiming to be speaking in defense of workers.<br /><br />The chamber supports the idea that corporations are persons with human and civil rights, as well as the idea that spending money on political candidates (which we used to call bribery) is a free-speech right, even for corporations. The chamber has submitted a lengthy amicus brief in the case of Citizens United v. Federal Election Commission arguing against restrictions on corporate election spending on the grounds that this would infringe on corporate free speech and that the single greatest victim of this infringement would be the Chamber of Commerce itself, which -- in the brief, as on its website -- falsely claims to have three million companies as members. In contrast, the American Independent Business Alliance has submitted a brief arguing the opposite view and considers the chamber's position dangerous to businesses other than Wal-Mart and Goldman Sachs. The AIBA denounces the chamber as favoring the purchase of political favors over engagement in actual competitive enterprise.<br /><br />As revealed by Mother Jones magazine this week, the chamber actually has 200,000 to 300,000 members, and falling. Companies that have pulled out of the chamber in protest of its promotion of climate destruction include: Apple, Exelon Energy, Pacific Gas and Electric, and the Public Service Co. of New Mexico. Even Nike has dropped its Board of Directors position while maintaining its membership. Even General Electric says that the chamber does not speak for it on climate issues, while maintaining its membership. When GE has to distance itself from you on the environment, you know something's wrong. And companies like Wal-Mart, Target, and Kelly Services Inc. have objected to the chamber's opposition to healthcare.<br /><br />Who's running this national train wreck? Tom Donohue, former CEO of the American Trucking Associations, currently serving on the board of directors of Union Pacific Corporation, a railroad company that hauls a lot of coal and has given Donohue over $1.3 million in pay plus over $3.8 million in shares, and another $700,000 to the chamber.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-71284026523687125432009-11-01T18:39:00.001-08:002009-11-01T18:39:59.401-08:00How Goldman secretly bet on the U.S. housing crashOriginal Link: <a href="http://www.mcclatchydc.com/227/story/77791.html">http://www.mcclatchydc.com/227/story/77791.html</a><br /><br />By Greg Gordon<br /><br />In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.<br /><br />Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.<br /><br />Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.<br /><br />Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.<br /><br />"The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Laurence Kotlikoff, a Boston University economics professor who's proposed a massive overhaul of the nation's banks. "This is fraud and should be prosecuted."<br /><br />John Coffee, a Columbia University law professor who served on an advisory committee to the New York Stock Exchange, said that investment banks have wide latitude to manage their assets, and so the legality of Goldman's maneuvers depends on what its executives knew at the time.<br /><br />"It would look much more damaging," Coffee said, "if it appeared that the firm was dumping these investments because it saw them as toxic waste and virtually worthless."<br /><br />Lloyd Blankfein, Goldman's chairman and chief executive, declined to be interviewed for this article.<br /><br />A Goldman spokesman, Michael DuVally, said that the firm decided in December 2006 to reduce its mortgage risks and did so by selling off subprime-related securities and making myriad insurance-like bets, called credit-default swaps, to "hedge" against a housing downturn.<br /><br />DuVally told McClatchy that Goldman "had no obligation to disclose how it was managing its risk, nor would investors have expected us to do so ... other market participants had access to the same information we did."<br /><br />For the past year, Goldman has been on the defensive over its Washington connections and the billions in federal bailout funds it received. Scant attention has been paid, however, to how it became the only major Wall Street player to extricate itself from the subprime securities market before the housing bubble burst.<br /><br />Goldman remains, along with Morgan Stanley, one of two venerable Wall Street investment banks still standing. Their grievously wounded peers Bear Stearns and Merrill Lynch fell into the arms of retail banks, while another, Lehman Brothers, folded.<br /><br />To piece together Goldman's role in the subprime meltdown, McClatchy reviewed hundreds of documents, SEC filings, copies of secret investment circulars, lawsuits and interviewed numerous people familiar with the firm's activities.<br /><br />McClatchy's inquiry found that Goldman Sachs:<br /><br />Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.<br /><br />Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.<br /><br />Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.<br /><br />Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.<br /><br />The firm benefited when Paulson elected not to save rival Lehman Brothers from collapse, and when he organized a massive rescue of tottering global insurer American International Group while in constant telephone contact with Goldman chief Blankfein. With the Federal Reserve Board's blessing, AIG later used $12.9 billion in taxpayers' dollars to pay off every penny it owed Goldman.<br /><br />These decisions preserved billions of dollars in value for Goldman's executives and shareholders. For example, Blankfein held 1.6 million shares in the company in September 2008, and he could have lost more than $150 million if his firm had gone bankrupt.<br /><br />With the help of more than $23 billion in direct and indirect federal aid, Goldman appears to have emerged intact from the economic implosion, limiting its subprime losses to $1.5 billion. By repaying $10 billion in direct federal bailout money — a 23 percent taxpayer return that exceeded federal officials' demand — the firm has escaped tough federal limits on 2009 bonuses to executives of firms that received bailout money.<br /><br />Goldman announced record earnings in July, and the firm is on course to surpass $50 billion in revenue in 2009 and to pay its employees more than $20 billion in year-end bonuses.<br /><br />THE BLUEST OF THE BLUE CHIPS<br /><br />For decades, Goldman, a bastion of Ivy League graduates that was founded in 1869, has cultivated an elite reputation as home to the best and brightest and a tradition of urging its executives to take turns at public service.<br /><br />As a result, Goldman has operated a virtual jobs conveyor belt to and from Washington: Paulson, as Treasury secretary, sent tens of billions of taxpayers' dollars to rescue Wall Street in 2008, and former Goldman employees populate some of the most demanding and powerful posts in Washington. Savvy federal regulators have migrated from their Washington jobs to Goldman.<br /><br />On Oct. 16, a Goldman vice president, Adam Storch, was named managing executive of the SEC's enforcement division.<br /><br />Goldman's financial panache made its sales pitches irresistible to policymakers and investors alike, and may help explain why so few of them questioned the risky securities that Goldman sold off in a 14-month period that ended in February 2007.<br /><br />Since the collapse of the economy, however, some of those investors have changed their opinions of Goldman.<br /><br />Several pension funds, including Mississippi's Public Employees' Retirement System, have filed suits, seeking class-action status, alleging that Goldman and other Wall Street firms negligently made "false and misleading" representations of the bonds' true risks.<br /><br />Mississippi Attorney General Jim Hood, whose state has lost $5 million of the $6 million it invested in Goldman's subprime mortgage-backed bonds in 2006, said the state's funds are likely to lose "hundreds of millions of dollars" on those and similar bonds.<br /><br />Hood assailed the investment banks "who packaged this junk and sold it to unwary investors."<br /><br />California's huge public employees' retirement system, known as CALPERS, purchased $64.4 million in subprime mortgage-backed bonds from Goldman on March 1, 2007. While that represented a tiny percentage of the fund's holdings, in July CALPERS listed the bonds' value at $16.6 million, a drop of nearly 75 percent, according to documents obtained through a state public records request.<br /><br />In May, without admitting wrongdoing, Goldman became the first firm to settle with the Massachusetts attorney general's office as it investigated Wall Street's subprime dealings. The firm agreed to pay $60 million to the state, most of it to reduce mortgage balances for 714 aggrieved homeowners.<br /><br />Attorney General Martha Coakley, now a candidate to succeed Edward Kennedy in the U.S. Senate, cited the blight from foreclosed homes in Boston and other Massachusetts cities. She said her office focused on investment banks because they provided a market for loans that mortgage lenders "knew or should have known were destined for failure."<br /><br />New Orleans' public employees' retirement system, an electrical workers union and the New Jersey carpenters union also are suing Goldman and other Wall Street firms over their losses.<br /><br />The full extent of the losses from Goldman's mortgage securities isn't known, but data obtained by McClatchy show that insurance companies, whose annuities provide income for many retirees, collectively paid $2 billion for Goldman's risky high-yield bonds.<br /><br />Among the bigger buyers: Ambac Assurance purchased $923 million of Goldman's bonds; the Teachers Insurance and Annuities Association, $141.5 million; New York Life, $96 million; Prudential, $70 million; and Allstate, $40.5 million, according to the data from the National Association of Insurance Commissioners.<br /><br />In 2007, as early signs of trouble rippled through the housing market, Goldman paid a discounted price of $8.8 million to repurchase subprime mortgage bonds that Prudential had bought for $12 million.<br /><br />Nearly all the insurers' purchases were made in 2006 and 2007, after mortgage lenders had lifted most traditional lending criteria in favor of loans that required little or no documentation of borrowers' incomes or assets.<br /><br />While Goldman was far from the biggest player in the risky mortgage securitization business, neither was it small.<br /><br />From 2001 to 2007, Goldman hawked at least $135 billion in bonds keyed to risky home loans, according to analyses by McClatchy and the industry newsletter Inside Mortgage Finance.<br /><br />In addition to selling about $39 billion of its own risky mortgage securities in 2006 and 2007, Goldman marketed at least $17 billion more for others.<br /><br />It also was the lead firm in marketing about $83 billion in complex securities, many of them backed by subprime mortgages, via the Caymans and other offshore sites, according to an analysis of unpublished industry data by Gary Kopff, a securitization expert.<br /><br />In at least one of these offshore deals, Goldman exaggerated the quality of more than $75 million of risky securities, describing the underlying mortgages as "prime" or "midprime," although in the U.S. they were marketed with lower grades.<br /><br />Goldman spokesman DuVally said that Moody's, the bond rating firm, gave them higher grades because the borrowers had high credit scores.<br /><br />Goldman's securities came in two varieties: those tied to subprime mortgages and those backed by a slightly higher grade of loans known as Alt-A's.<br /><br />Over time, both types of mortgages required homeowners to pay rapidly rising interest rates. Defaults on subprime loans were responsible for last year's housing meltdown. Interest rates on Alt-A loans, which began to rocket upward this year, are causing a new round of defaults.<br /><br />Goldman has taken multiple steps to put its subprime dealings behind it, including publicly saying that Wall Street firms regret their mistakes. Last winter, the company cancelled a Las Vegas conference, avoiding any images of employees flashing wads of bonus cash at casinos.<br /><br />More recently, the firm has launched a public relations campaign to answer the criticism of its huge bonuses, Washington connections and federal bailout. In late October, Blankfein argued that Goldman's activities serve "an important social purpose" by channeling pools of money held by pension funds and others to companies and governments around the world.<br /><br />KNOWING WHEN TO FOLD THEM<br /><br />For investment banks such as Goldman, the trick was knowing when to exit the high-stakes subprime game before getting burned.<br /><br />New York hedge fund manager John Paulson was one of the first to anticipate disaster. He told Congress that his researchers discovered by early 2006 that many subprime loans covered the homes' entire value, with no down payments, and so he figured that the bonds "would become worthless."<br /><br />He soon began placing exotic bets — credit-default swaps — against the housing market. His firm, Paulson & Co., booked a $3.7 billion profit when home prices tanked and subprime defaults soared in 2007 and 2008. (He isn't related to Henry Paulson.)<br /><br />At least as early as 2005, Goldman similarly began using swaps to limit its exposure to risky mortgages, the first of multiple strategies it would employ to reduce its subprime risk.<br /><br />The company has closely guarded the details of most of its swaps trades, except for $20 billion in widely publicized contracts it purchased from AIG in 2005 and 2006 to cover mortgage defaults or ratings downgrades on subprime-related securities it offered offshore.<br /><br />In December 2006, after "10 straight days of losses" in Goldman's mortgage business, Chief Financial Officer David Viniar called a meeting of mortgage traders and other key personnel, Goldman spokesman DuVally said.<br /><br />Shortly after the meeting, he said, it was decided to reduce the firm's mortgage risk by selling off its inventory of bonds and betting against those classes of securities in secretive swaps markets.<br /><br />DuVally said that at the time, Goldman executives "had no way of knowing how difficult housing or financial market conditions would become."<br /><br />In early 2007, the firm's mortgage traders also bet heavily against the housing market on a year-old subprime index on a private London swap exchange, said several Wall Street figures familiar with those dealings, who declined to be identified because the transactions were confidential.<br /><br />The swaps contracts would pay off big, especially those with AIG. When Goldman's securities lost value in 2007 and early 2008, the firm demanded $10 billion, of which AIG reluctantly posted $7.5 billion, Viniar disclosed last spring.<br /><br />As Goldman's and others' collateral demands grew, AIG suffered an enormous cash squeeze in September 2008, leading to the taxpayer bailout to prevent worldwide losses. Goldman's payout from AIG included more than $8 billion to settle swaps contracts.<br /><br />DuVally said Goldman has made other bets with hundreds of unidentified counterparties to insure its own subprime risks and to take positions against the housing market for its clients. Until the end of 2006, he said, Goldman was still betting on a strong housing market.<br /><br />However, Goldman sold off nearly $28 billion of risky mortgage securities it had issued in the U.S. in 2006, including $10 billion on Oct. 6, 2006. The firm unloaded another $11 billion in February 2007, after it had intensified its contrary bets. Goldman also stopped buying risky home mortgages after the December meeting, though DuVally declined to say when.<br /><br />I'VE GOT A SECRET<br /><br />Despite updating its numerous disclosures to investors in 2007, Goldman never revealed its secret wagers.<br /><br />Asked whether Goldman's bond sellers knew about the contrary bets, spokesman DuVally said the company's mortgage business "has extensive barriers designed to keep information within its proper confines."<br /><br />However, Viniar, the Goldman finance chief, approved the securities sales and the simultaneous bets on a housing downturn. Dan Sparks, a Texan who oversaw the firm's mortgage-related swaps trading, also served as the head of Goldman Sachs Mortgage from late 2006 to April 2008, when he abruptly resigned for personal reasons.<br /><br />The Securities Act of 1933 imposes a special disclosure burden on principal underwriters of securities, which was Goldman's role when it sold about $39 billion of its own risky mortgage-backed securities from March 2006 to February 2007.<br /><br />The firm maintains that the requirement doesn't apply in this case.<br /><br />DuVally said the firm sold virtually all its subprime-related securities to Qualified Institutional Buyers, a class of sophisticated investors that are afforded fewer protections than small investors are under federal securities laws. He said Goldman made all the required disclosures about risks.<br /><br />Whether companies are obliged to inform investors about such contrary trades, or "hedges," is "a very hot issue" in cases winding through the courts, said Frank Partnoy, a University of San Diego law professor who specializes in securities. One issue is how specific companies must be in disclosing potential risks to investors, he said.<br /><br />Coffee, the Columbia University law professor, said that any potential violations of securities laws would depend on what Goldman executives knew about the risks ahead.<br /><br />"The critical moment when Goldman would have the highest liability and disclosure obligations is when they are serving as an underwriter on a registered public offering," he said. "If they are at the same time desperately seeking to get out of the field, that kind of bailout does look far more dubious than just trading activities."<br /><br />Another question is whether, by keeping the trades secret, the company withheld material information that would enable investors to assess Goldman's motives for selling the bonds, said James Cox, a Duke University law professor who also has served on the NYSE advisory panel.<br /><br />If Goldman had disclosed the contrary bets, he said, "One would have to believe that a rational investor would not only consider Goldman's conduct material, but likely compelling a decision to take a pass on the recommendation to purchase."<br /><br />Cox said that existing laws, however, don't require sufficient disclosures about trading, and that the government would do well to plug that hole.<br /><br />In marketing disclosures filed with the SEC regarding each pool of subprime bonds from 2001 to 2007, Goldman listed an array of risk factors that grew over time. Among them was the possibility of a pullback in overheated real estate markets, especially in California and Florida, where the most subprime loans had been made.<br /><br />Suits filed by the pension funds, however, allege that Goldman made materially false or misleading statements in its public offerings, failing to disclose that many loans were based on inflated appraisals and were bought from firms with poor lending practices.<br /><br />DuVally said that investors were fully informed of all known risks.<br /><br />"What's going to happen in the next few years," said San Diego's Partnoy, "is there's going to be a lot of lawsuits and judges will have to decide, should Goldman have disclosed more or not?"Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-88611017218833960472009-10-28T20:51:00.000-07:002009-10-28T20:53:27.644-07:00Chamber of HorrorsOriginal Link: <a href="http://www.slate.com/id/2232441/">http://www.slate.com/id/2232441/</a><br /><br />By Eliot Spitzer<br /><br />The U.S. Chamber of Commerce—the self-proclaimed voice of business in Washington—has been wrong on virtually every major public-policy issue of the past decade: financial deregulation, tax and fiscal policy, global warming and environmental enforcement, consumer protection, health care reform …<br /><br />The chamber remains an unabashed voice for the libertarian worldview that caused the most catastrophic economic meltdown since the Great Depression. And the chamber's view of social justice would warm Scrooge's heart. It is the chamber's right to be wrong, and its right to argue its preposterous ideas aggressively, as it does through vast expenditures on lobbyists and litigation. Last year alone, the chamber spent more than $91 million on lobbying, and, according to lobby tracker Opensecrets.org, it has spent more than twice as much on lobbying during the past 12 years as any other corporation or group.<br /><br />The problem is, the chamber is doing all this with our money. The chamber survives financially on the dues and support of its members, which are most of America's major corporations listed on the stock exchange. The chamber derives its political clout from the fact that its membership includes these corporations. Yet we—you and I—own the companies that support the chamber and permit it to propagate its views. Our passive, permissive attitude toward the management of the companies we own has enabled the chamber to be one of the primary impediments to the reform of markets, health care, energy policy, and politics that we have all been calling for. It is time for that to change.<br /><br />How, you might ask, do we own these companies? Public pension funds and mutual funds are the largest owners of equities in the market. They are the institutional shareholders that have the capacity to push management—and the boards of the corporations. Yet the mutual funds and pension funds have failed to do so. They have failed to control the management of the companies they own because the actual owners of those mutual funds and pension funds—you and I—have failed to raise our voices. We haven't even asked questions.<br /><br />Mutual funds, until recently, didn't even disclose how they voted the proxies of shares they owned. When asked why not at a forum I was part of several years ago, the general counsel of one of the largest mutual fund companies tried to explain that it would be too expensive to make such disclosure. The answer was patently ridiculous, and it hid the much more important reason for nondisclosure: Mutual funds rarely if ever want to vote in opposition to management because mutual funds want to be included among the list of 401(k) options the company chooses for its employees. Mutual funds make money by increasing the size of the portfolios they manage, and if management knocks them off the 401(k) list, they will lose that revenue stream. This basic conflict of interest has neutered mutual funds. They are not meaningful checks on corporate mismanagement.<br /><br />The comptrollers and treasurers who run public pension funds (often elected officials), have also failed to flex their political muscles. The passivity of the publicly elected officials who have the capacity to raise these issues has been a bit surprising.<br /><br />So what should be done? The issue of passive institutional ownership is one of the most vexing and serious problems in American business. Expecting CEOs and boards to run companies properly without our input is a prescription for failure. But at least on the one issue of corporations playing politics with our money through support of the U.S. Chamber of Commerce, there is an easy answer.<br /><br />The elected comptrollers and treasurers who agree—as a vast majority will—that the Chamber of Commerce has a distorted view of both economic and political policy should demand that each company in which they own stock drop its membership in the chamber. If the CEO doesn't agree, the public pension funds should pressure the board to drop the chamber membership. If one activist state comptroller begins to build this coalition, the other state pension funds will follow.<br /><br />In recent weeks, Apple and two energy companies—PG&E and Exelon—have defected from the chamber, objecting to its environmental policies. The Wall Street Journal editorial page of course views this bit of wisdom as heresy and counter to shareholder interest.<br /><br />If elected comptrollers and treasurers do take a stand against the U.S. Chamber of Commerce, expect a hue and cry from the typical voices. They will complain that elected comptrollers and treasurers are injecting politics into corporate management. To which the answer should be: No, they are trying to take politics out of it! It is corporate leadership, through its support of the chamber, that has injected politics into the corporations that we own. We are reminding corporate leaders that they are our fiduciaries. As long as the chamber and the CEOs who are supposed to be our representatives are using our money to be overtly political, it is our duty to respond. If we are passive, we permit the chamber to hijack our funds and companies to support positions antithetical to our own views. Waking pension funds and mutual funds from their slumber on this relatively easy issue might finally begin the necessary process of fixing mismanaged corporations.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-33031732024588791012009-10-24T20:32:00.000-07:002009-10-24T20:33:51.789-07:00New Weiner Study Shows 151 Members of House and Senate Get the “Public Option” NowOriginal Link: <a href="http://weiner.house.gov/news_display.aspx?id=1364">http://weiner.house.gov/news_display.aspx?id=1364</a><br /><br />Weiner Calls on GOP Opponents of the Public Option to Give Up Their Medicare<br /><br />WASHINGTON, DC—A new study by Representative Anthony Weiner (D – Queens & Brooklyn), member of the Health Subcommittee and Co-Chair of the Caucus on the Middle Class, revealed that 151 members of the House and Senate currently receive government-funded; government-administered single-payer health care - Medicare.<br /><br />On the list of recipients are 55 Republicans who have steadfastly opposed other Americans getting the public option, like the one they have chosen.<br /><br />Weiner said, “Even in a town known for hypocrisy, this list of 55 Members of Congress deserve some sort of prize. They apparently think the public option is ok for them, but not anyone else.”<br /><br />The list of congressional recipients of Medicare who also oppose the public option is below:<br /><br />Rep. Ralph M. Hall<br />Rep. Roscoe G. Bartlett<br />Rep. Sam Johnson<br />Rep. C.W. Bill Young<br />Rep. Howard Coble<br />Sen. Jim Bunning<br />Sen. Richard G. Lugar<br />Rep. Don Young<br />Sen. Charles E. Grassley<br />Sen. Robert F. Bennett<br />Rep. Vernon J. Ehlers<br />Sen. Orrin G. Hatch<br />Sen. Richard C. Shelby<br />Rep. Jerry Lewis<br />Sen. James M. Inhofe<br />Rep. Ron Paul<br />Rep. Henry E. Brown<br />Sen. Pat Roberts<br />Sen. George V. Voinovich<br />Sen. John McCain<br />Rep. Judy Biggert<br />Sen. Thad Cochran<br />Rep. Harold Rogers<br />Rep. Dan Burton<br />Rep. Howard P. "Buck" McKeon<br />Rep. Frank R. Wolf<br />Sen. Christopher S. Bond<br />Rep. Michael N. Castle<br />Rep. Joe Pitts<br />Rep. Tom Petri<br />Sen. Lamar Alexander<br />Rep. Doc Hastings<br />Rep. Cliff Stearns<br />Rep. Sue Myrick<br />Rep. John Carter<br />Sen. Mitch McConnell<br />Sen. Jon Kyl<br />Rep. Phil Gingrey<br />Rep. Nathan Deal<br />Rep. John Linder<br />Rep. Kay Granger<br />Rep. John L. Mica<br />Rep. Walter B. Jones<br />Sen. Jim Risch<br />Rep. Ed Whitfield<br />Rep. F. James Sensenbrenner<br />Rep. Virginia Foxx<br />Sen. Kay Bailey Hutchison<br />Rep. Ginny Brown-Waite<br />Sen. Saxby Chambliss<br />Sen. Michael B. Enzi<br />Rep. Elton Gallegly<br />Rep. Donald Manzullo<br />Rep. Peter T. King<br />Rep. Ander CrenshawLone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-21565240977179909342009-10-18T18:27:00.000-07:002009-10-18T18:29:05.756-07:00Don’t Let Exceptions Kill the RuleOriginal Link: <a href="http://www.nytimes.com/2009/10/18/business/economy/18gret.html">http://www.nytimes.com/2009/10/18/business/economy/18gret.html</a><br /><br />By GRETCHEN MORGENSON<br /><br />CONGRESS began the work of reforming our troubled financial system last week, and a bill aimed at regulating derivatives passed the House Financial Services Committee on Thursday.<br /><br />Derivatives — contracts that theoretically protect buyers from unforeseen financial calamities but more often are used to fuel raw speculation — were, lest we forget, at the heart of the banking crisis.<br /><br />Credit default swaps, Wall Street-style insurance contracts that let speculators bet against a company or debt issue, propelled the American International Group off the cliff. Those swaps also linked millions of trading partners, creating a web in which one default threatened to produce a chain of corporate and economic failures worldwide.<br /><br />And derivatives aren’t going away. In the right hands, they help parties manage risk. In the wrong hands, they are among the most destructive financial products ever invented. So reforming the $42 trillion market for credit swaps is crucial if taxpayers are to be protected from future rescues of institutions deemed not only too big but also too interconnected to fail.<br /><br />The best aspect of the House bill is that it requires many swaps to be traded on exchanges just like stocks, subjecting them for the first time to the light of day. But elsewhere in the bill, known as the Over-the-Counter Derivatives Market Act of 2009, exceptions to this exchange-trading rule undermine its regulatory power.<br /><br />Derivatives regulation has been on the nation’s financial reform agenda for months. Undoing the Clinton-era law that exempted swaps from oversight is seen as imperative, except perhaps by big banks that deal in the contracts. It’s worth noting that many members of the Clinton economic team, including Lawrence Summers, Timothy Geithner and Gary Gensler, now hold pivotal policy-making positions in the Obama administration.<br /><br />In August, the White House sent its derivatives proposal to Congress, recommending that all standardized contracts trade on an exchange. But big banks dealing in swaps don’t want exchange trading, where pricing and the identities of participants would be more publicly transparent. Savvier swaps customers would soon pay less on their transactions and bank profits would fall.<br /><br />Some swaps buyers also dislike exchange trading because it would require them to put up a cash cushion — or margin — before a transaction. This is to help prevent counterparty failures, but participants in the market prefer not to pay this freight. They’d rather taxpayers foot the bill for a possible collapse later on, as they did with A.I.G.<br /><br />Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, dismissed criticism of the bill he is steering along, saying that it would create incentives to make exchange-traded swaps the norm. “We passed the bill to drive most of the swaps onto exchanges,” he said in an interview Friday. “End users will move in that direction to save money.” But Michael Greenberger, a University of Maryland law professor and an expert in derivatives, criticized the House bill. “While I know there was a good-faith effort to improve the regulation, the plain language of the legislation can only be read as a Christmas tree of decorative gifts to the banking industry,” he said. “And this is being done when people acknowledge the unregulated O.T.C. derivatives market was a principal reason for the meltdown.”<br /><br />A SIGNIFICANT exception in the bill says that if a transaction involves a company that uses a swap to offset its commercial risks — the bill defines this entity as an end user — its trade does not have to be put on an exchange. This was intended to address complaints from swaps customers — like airlines or oil companies that hedge their commercial risks — that their costs would rise unnecessarily under the bill.<br /><br />The problem is the bill’s lack of specificity about what an end user is. Indeed, what is to stop a hedge fund or private equity firm from setting up companies to meet the “end user” definition so their trades could escape scrutiny?<br /><br />Another questionable exemption says that if a swap is to be exchange-traded, it must be deemed “clearable” by facilities known as clearinghouses. Some of these are partially owned by banks. If a clearinghouse decides that the swap can be cleared, then it can trade on an exchange.<br /><br />Gee, do you think the banks might be a tad hesitant to punt a very lucrative line of business onto less profitable exchanges? Do you think they might have an incentive to say that the most profitable swaps simply aren’t clearable?<br /><br />Conflicts posed by swaps dealers’ stakes in clearinghouses is no small thing. Those on the House committee who amended the bill recognized the problem and decided to restrict swaps dealers’ ownership of clearinghouses to 20 percent; the balance might go to public investors.<br /><br />To be sure, the House bill is just the first step in what is likely to be a long road to reforming this huge and opaque market. And more oversight is surely better than none. The House Agriculture Committee, which oversees the Commodity Futures Trading Commission, will take up the matter now.<br /><br />But the stakes for taxpayers who might have to take on yet another wave of financial bailouts in the future are even higher. And allowing the very institutions that imperiled our economy to weaken derivatives reform would be a grave insult to those whose rescue money is being used, even today, to generate bank profits and a recent round of outsize bonuses.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-31828714347589622522009-10-18T14:30:00.000-07:002009-10-18T14:31:51.952-07:00The Rich Have Stolen the EconomyOriginal Link: <a href="http://www.counterpunch.org/roberts10162009.html">http://www.counterpunch.org/roberts10162009.html</a><br /><br />By PAUL CRAIG ROBERTS<br /><br />Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg adds that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers. <br /><br />The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless. <br /><br />JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.<br /><br />Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. The London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each with the highest paid as much as 10 million pounds ($16 million).“<br /><br />In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine--”How To Spend It.” <br />New York City’s retailers are praying for some of it, suffering a 15.3 per cent vacancy rate on Fifth Avenue. Statistician John Williams (shadowstats.com) reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”<br /><br />Meanwhile, occupants of New York City’s homeless shelters have reached the all time high of 39,000, 16,000 of whom are children. <br /><br />New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city. It is charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.<br /><br />Long-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10 per cent to 20 per cent. Now hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. High unemployment has made 2009 a banner year for military recruitment.<br /><br />A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall. According to Jay Brinkmann of the Mortgage Bankers Association, job losses have spread the problem from subprime loans to prime fixed-rate loans. At the Wise, Virginia, fairgrounds, 2,000 people waited in lines for free dental and health care.<br /><br />While the US speeds plans for the ultimate bunker buster bomb and President Obama prepares to send another 45,000 troops into Afghanistan, 44,789 Americans die every year from lack of medical treatment. National Guardsmen say they would rather face the Taliban than the US economy. <br /><br />Little wonder. In the midst of the worst unemployment since the Great Depression, US corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas.<br /><br />The offshoring of jobs, the bailout of rich banksters, and war deficits are destroying the value of the US dollar. Since last spring the US dollar has been rapidly losing value. The currency of the hegemonic superpower has declined 14 per cent against the Botswana pula, 22 per cent against Brazil’s real, and 11 per cent against the Russian ruble. Once the dollar loses its reserve currency status, the US will be unable to pay for its imports or to finance its government budget deficits.<br /><br />Offshoring has made Americans heavily dependent on imports, and the dollar’s loss of purchasing power will further erode American incomes. As the Federal Reserve is forced to monetize Treasury debt issues, domestic inflation will break out. Except for the banksters and the offshoring CEOs, there is no source of consumer demand to drive the US economy.<br /><br />The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-88655132329702615202009-10-17T13:23:00.000-07:002009-10-17T13:24:36.455-07:00GOP deals death blow by blocking public optionOriginal Link: <a href="http://www.nevadaappeal.com/article/20091017/NEWS/910169951/1001/NONE">http://www.nevadaappeal.com/article/20091017/NEWS/910169951/1001/NONE</a><br /><br />By Dr. Eugene T. Paslov<br /><br />The “just say no” Congressional Republicans are probably feeling smug and self-righteous. They, and a few Blue Dog Democrats, defeated the public option provision of the insurance reform bill in the Senate Appropriations Committee.<br /><br />But as the old saying goes, “It ain't over 'til the fat lady sings.” Sen. Reid is a master politician and will be working behind the scenes with the Obama administration to find a way to make affordable health care available to all. Heath care for all is what the majority of Americans want; and it is what we need to be internationally competitive and healthy.<br /><br />If the Congressional Republicans succeed in blocking health care reform (they claim to be interested in denying Americans health care in an effort to deliver a political defeat to the president), they will literally deal death sentences to citizens and will themselves, as a national party, fall into the depths of obscurity from which they may never return.<br /><br />Our current system of health care is unsustainable; it is obscenely costly and wasteful. By most international health care measures our system of care is not very effective, except for the few who can afford the very best. We rank with Third World countries in terms of infant mortality and longevity. The only ones who really benefit from our current system are the insurance companies, and they're looking to increase their profits and reduce their risks.<br /><br />Our morally challenged junior senator, John Ensign, testified at a recent appropriations committee hearing that universal medical care was too costly. He claimed that if such a system were put in place, Congress wouldn't be able to control it. I doubt that. And why wouldn't he want the best health care possible for his constituents?<br /><br />The League of Women Voters tells us that the House and the administration have health care bills that will (1) provide universal health care for all Americans, and include a public option, (2) control health care costs, (3) improve safety and quality of care, (4) include transparency in plans and coverage, and (5) provide adequate financing.<br /><br />These bills will not hurt seniors or end Medicare; they will not ration coverage and care; and they will not impose long delays on cancer treatment and vital surgeries.<br /><br />If the Congressional Republicans will not support universal health care for all Americans, including a public option, I'd say let them rot in Hades, and Blue Dog Democrats as well. Vote them out of office at the first opportunity.<br /><br />Let's support the administration and the men and women who will help make us a healthy and internationally competitive nation.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-38517512655157980652009-10-16T16:54:00.000-07:002009-10-16T16:57:06.620-07:00The Sick Business of Health-Care ProfiteeringOriginal Link: <a href="http://www.vanityfair.com/politics/features/2009/09/health-care200909">http://www.vanityfair.com/politics/features/2009/09/health-care200909</a><br /><br />By Matt Kapp<br /><br />Think Wall Street’s titans are the highest paid C.E.O.’s in the land? Think again. With median annual compensation of more than $12 million, medical moguls take the pay prize, even as the quality of care we receive falls to embarrassing lows. As the debate over health-care reform intensifies, the author catalogues the industry’s unbridled profiteering.<br /><br />It’s become a national pastime to bash Wall Street’s lavish pay packages, but as we enter the vortex of another health-care showdown, consider these overlooked facts: With median annual compensation of more than $12.4 million, C.E.O.’s at the big health-care companies make two-thirds more than their counterparts in finance and are the highest paid of any industry. The health-care industry’s total annual profit has grown to an estimated $200 billion, and it doled out nearly $170 million in campaign contributions in 2007 and 2008. It now spends more than any other industry lobbying the federal government—$3.5 billion over the past decade and a record $263 million in the first six months of this year. That’s six lobbyists and nearly half a million dollars for each member of Congress. It’s been a good year on K Street, too.<br /><br />It should come as no surprise, then, that we spend 17 percent of our G.D.P. and more than $7,500 per American per year on health care. That’s 50% more than any other industrialized nation. Meanwhile, the quality of care we get in return has fallen to embarrassing lows. According to the World Health Organization, our health-care system ranks 37th in overall quality and fairness, placing us between Costa Rica and Slovenia. We rank 41st in infant-mortality rates, alongside Slovakia and Serbia, and dead last among 19 leading industrialized countries in preventable deaths. Nearly two-thirds of personal bankruptcies in the U.S. are caused by illness, yet more than three-quarters of those people actually had health insurance when they fell ill. In other words, we’re all getting ripped off.<br /><br />Health-Insurance Companies<br /><br />Gambling investors’ money on exotic securities in pursuit of outsize returns may be a dubious profit model, but what could be worse than the health-insurance industry’s core model: screwing sick people to boost margins. President Obama has taken aim at big health-insurance companies and their “record profits.” While it’s true they’ve managed to more than triple their profits over the last eight years, they’ve still only lifted their average margin to 3.4 percent, enough to place 87th out of 215 industries. But they shouldn’t be complaining about lackluster profits when they’re paying their C.E.O.’s and executives as extravagantly as they are. Dishing out this much scratch, it’s a wonder they’re making any profits at all: Aetna C.E.O. Ronald Williams has helped purge millions of members from the company’s rolls; his total annual compensation in 2008 was $24,300,112. Angela Braly, who has promised that WellPoint “will not sacrifice profitability,” also saw a raise, to $9,844,212. Cigna’s Edward Hanway saw his pay cut in half and still hauled in $12,236,740, but he was forced to manage a major P.R. crisis after the company initially refused to approve a liver transplant for a 17-year-old girl, which it said was “outside the scope of the plan’s coverage.” She died just hours after Cigna changed its mind and decided it would pay for a new liver after all. Despite a 75 percent pay drop in 2008, cutting him down to a humiliating $3,241,042, UnitedHealth Group’s Stephen Hemsley put on a brave face for Congress, assuring legislators: “Our mission at UnitedHealth Group is to help people live healthier lives.” UnitedHealth has been fined tens of millions of dollars for claims-processing violations (i.e., stiffing patients and doctors). Hemsley’s predecessor, William McGuire, resigned amid a stock-options backdating scandal in 2006. He still walked away with nearly half a billion dollars in stock options. Hemsley surrendered $190 million in options himself, but with $744,232,068 left over, he should be fine.<br /><br />Even C.E.O.’s at “not-for-profit” insurance companies (like most state Blue Cross and Blue Shields) collect multi-million-dollar compensation packages, even as their companies pay little in the way of taxes. Blue Cross of Massachusetts’s C.E.O., Cleve Killingsworth, got a 26 percent raise in 2008, to $3.5 million, and Blue Cross of North Carolina’s C.E.O., Bob Greczyn, pulled down nearly $4 million after a 19 percent raise. Gail Boudreaux left Blue Cross of Illinois in December 2007 with $15.3 million. The not-for-profits can be just as freewheeling with expense accounts. In early September, a state audit found that Blue Cross of North Dakota used premiums to pay for a $238,000 sales managers’ retreat in the Cayman Islands and a $34,814 retirement party for an executive.<br /><br />The bottom line for health-insurance companies is that things like new livers really eat into profits. But it’s not just the expensive life-and-death stuff they’re rejecting. While health-insurance premiums have more than doubled in the past decade, a recent study by the California Nurses Association found that the six biggest insurers in California denied an average of 21 percent of all claims in the first half of 2009, with PacifiCare denying an astonishing 39.6%. The nurses were able to conduct their study, the first of its kind, only because California requires insurance companies to provide detailed records of claims denials. (It’s the only state with such a mandate.)<br /><br />On August 17, Representative Henry Waxman sent out a letter to 52 health-insurance companies asking for revenue and profit figures over the past five years, a list of employees making more than $500,000 a year, and an itemization of expenses for “all conferences, retreats, or other events held outside company facilities” since 2007. The deadline for responses was September 14. When the details are released, we can expect a collective gasp.<br /><br />Hospital Operators<br /><br />The companies that manage hospitals post annual average profit margins of 5 percent, slightly better than the insurers. Hospital Corporation of America, founded by former senator Bill Frist’s father and brother, saw revenues climb 23 percent, to $28 billion, in 2008 with a tidy (if comparatively tiny) profit of $673 million. The Nashville-based company is doing better in 2009, doubling second-quarter revenue over last year. Back in 2002, H.C.A. paid $1.7 billion in fines to settle charges of Medicare and Medicaid fraud, the biggest settlement for an individual corporation in U.S. history at the time. And now H.C.A., whose outgoing chairman, Jack Bovender, made $6.87 million in 2007 and reportedly rides around Nashville in a cherry-red Ferrari, is fighting a class-action lawsuit alleging that “systematic understaffing” at H.C.A. facilities endangered patients.<br /><br />Tenet Healthcare’s rap sheet is equally impressive. In 1994 the company paid the government $362 million in fines and penalties after pleading guilty to paying bribes and kickbacks for patient referrals. In 1999, Tenet settled lawsuits with 680 former psychiatric patients who claimed the company held them in hospitals against their will. In 2006 it agreed to pay the government $900 million to settle charges it had overbilled Medicare by marking up its prices many times over actual costs. While it’s been a turbulent ride for Tenet’s shareholders lately, C.E.O. Trevor Fetter is still allowed 75 hours’ worth of personal use of the company jet each year and pulled down a cool $9.7 million in 2008.<br /><br />HealthSouth’s Richard Scrushy used to throw garish fêtes on his 92-foot yacht, the Chez Soiree, and was worth an estimated $300 million at the peak of the party. He’s now serving an 82-month sentence for bribery, conspiracy, and mail fraud; in June, he was ordered to pay $2.87 billion in damages to shareholders. “I have no interest in having money,” Scrushy told the judge when pleading for leniency at his sentencing. “I’m just a pastor.” (Scrushy co-founded a ministry in 2006.) HealthSouth lawyers are still trying to seize the Chez Soiree, now dry-docked in Florida.<br /><br />Laboratory Testing Companies<br /><br />The $50 billion medical-lab-testing sector’s average profit margin is a healthy 8.2 percent, putting it just above restaurants and below oil and gas equipment and services. The mother of all lab-test companies, Quest Diagnostics, earned a 9.1 percent margin during the last year, just a hair behind Exxon Mobil. In April, defunct Quest subsidiary Nichols Institute Diagnostics pleaded guilty and paid a $40 million criminal fine for the felony misbranding of a test called the Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay. (With names like these, they could just as well charge you for their afternoon coffee and call it Post Meridien Genera Coffea Robusta on your bill.) Another $262 million was paid by Quest to settle other civil allegations. Despite the fines, Quest’s revenues were up 3.5 percent in the second quarter of 2009, to $1.9 billion, and its C.E.O., Surya Mohapatra, pulled down $11,964,632 in compensation last year.<br /><br />In March, California attorney general Jerry Brown announced a civil lawsuit against seven medical labs, including Quest and LabCorp, for allegedly overcharging the state’s Medi-Cal program by up to 600 percent for routine tests. “In the face of declining state revenues,” he said at a press conference, “these medical laboratories have been ripping off our medical program for our most vulnerable people.” The suit claims that Quest was charging Medi-Cal $8.59 for simple blood-count tests while billing other clients $1.43 for the same test, and that LabCorp was charging Medi-Cal five times what it was charging others for hepatitis C antibody screenings. (Quest dismisses the attorney general’s allegations, noting that “the complaint was originally filed by a small laboratory that competes against our company” and “our services were priced appropriately.”) A little more than a decade ago, LabCorp paid $173 million to settle fraud allegations arising from the Justice Department’s Operation labscam crackdown on fraudulent lab-company billing. LabCorp C.E.O. David King’s pay was $8.2 million in 2008. The company posted a $514 million profit, with a margin of 10.3 percent, just behind AT&T.<br /><br />Giant settlements for lab-billing scams have been commonplace since the 1980s, but Congress has failed to implement any real anti-fraud protections for Medicare: a paltry $756 million is currently devoted to fraud prevention, less than one-fifth of one percent of Medicare’s annual budget. Given the unbridled pillaging going on, it’s little wonder Medicare is projected to become insolvent by 2017. The Government Accountability Office has estimated that 10 cents of every dollar spent on Medicare is lost to fraud, which means that $42 billion is expected to vanish this year. That’s $280 picked from the pocket of every wage-earning American.<br /><br />Health-Care Real-Estate Investment Trusts<br />Where the health-care industry really stretches out the profit margins is in Real Estate Investment Trusts (reits). Essentially hospital and health-care-facility landlords, the folks with money in health-care reits are used to seeing double-digit returns. Last year they ranked second, behind only the beverage business, with a 24.6 percent average profit margin. Despite the real-estate doldrums, the bluntly branded Health Care reit, Inc., has recently been called a “hot stock” for basking in net margins of nearly 40 percent. So although C.E.O. George Chapman’s compensation was a meager $5.2 million in 2008, he’s bound to do better in 2009.<br /><br />The biggest of the health-care reits, Health Care Property Investors, Inc., paid its C.E.O., James Flaherty, $6.54 million last year. The company points out on its Web site that “The healthcare industry is growing and is expected to represent 17.7% of U.S. Gross Domestic Product in 2010,” as if this is good news for everyone, and illustrates in a graph that this percentage is expected to top 20 percent by 2018. Trivia: At this pace, by the year 2300, 100% of our GDP will go to health care. The future indeed looks rosy for reits: aging baby-boomers will drive the growth of long-term-care facilities for years to come.<br /><br />Big Pharma<br /><br />With more than $300 billion in annual revenue and nearly $50 billion in profits, Big Pharma is the 800-pound gorilla in the room. The pharmaceutical industry’s share of G.D.P. has more than tripled since 1980, and its average profit margins are now better than 15 percent. The checks forked over to the men at the top of the big drug companies take the cake. Forest Labs’ C.E.O., Howard Solomon, has made an average of $33 million a year over the last six years. (He is 81 years old, so you can adjust for seniority.) Abbot Labs’ C.E.O., Miles White, reeled in $25.3 million last year, with profits up 35 percent, to $4.88 billion. Merck’s Richard Clark and Bristol-Myers Squibb’s James Cornelius each pulled down $17.2 million. Pfizer C.E.O. Jeff Kindler’s pay package was $13.1 million, and Wyeth’s C.E.O., Bernard Poussot, saw a 69 percent raise, to $21.3 million. The two companies merged and purged 19,500 workers (a marriage made possible by tarp money, to make matters worse), which landed Poussot a “change of control” bonus of $24 million. Unlike Tenet’s C.E.O., whose personal aircraft use is capped, Poussot is actually required by the board of directors “when feasible” to use Wyeth’s toys for personal travel, “for security and other reasons.” Somehow this is all news to New York City’s well-heeled mayor, Mike Bloomberg, who said on his radio show last month, “You know, last time I checked, pharmaceutical companies don’t make a lot of money, their executives don’t make a lot of money.”<br /><br />Given the fact that pharmaceutical-industry innovations have increased the expectancy and quality of life for countless people, most Americans tend to give the drug companies wide moral latitude. And the drug companies have done everything they can to exploit the free pass in pursuit of profit, which occasionally lands them in hot water. In January, Eli Lilly was ordered to pay more than $1.4 billion as part of a civil settlement and plea agreement for their “off-label promotion” of the anti-psychotic drug Zyprexa. In early September, Pfizer paid a record settlement—$2.3 billion—for the unlawful marketing of the painkiller Bextra.<br /><br />In stark contrast to all this greed, general physicians make about $148,000 on average a year, with heart and nuero surgeons topping the scale at around $550,000. (Who wouldn’t want his surgeon to be making good money?) But even your heart surgeon is making less than 5 percent of what the average health-care C.E.O. earns. No wonder doctors are cranky these days. Their salaries are flat, and they’ve been forced into indentured servitude by the insurance companies, whose reams of unnecessary paperwork clog their offices and cut into their time with patients. After years of double-digit increases, malpractice-insurance premiums have stabilized in many states in the last 12 months or so, but family physicians still pay an average of $12,500 annually. Premiums for specialists like neurosurgeons can run well over $100,000 a year in some states. Patients are cranky, too, having seen their premiums more than double in the last decade.<br /><br />So why have the Democrats pushing health-care reform been reluctant to draw attention to the profound profiteering going on in the health-care biz? Why won’t they just spit it out: as long as our health-care system is a casino-haven for ambitious M.B.A.’s, Wall Street brokerages, middlemen, and bottom-feeders looking for easy money, it will remain broken for the rest of us. Pointing out how deeply we’re getting our pockets picked, and by whom, would surely rouse umbrage in the insured and uninsured alike.<br /><br />Politicians deny that the money they get from health-care interests has in any way swayed their opinions on reform, but it sure seems to have flagged their resolve. In the first six months of this year, Senator Blanche Lincoln brought in $325,350 from health-care-industry interests. She recently came out against the public option, the biggest menace to insurance companies because, in theory, it could lure away potential costumers. Senate majority leader Harry Reid, who supports a public option but thinks it ought to be privately run, collected $382,400. Senator Max Baucus, head of the bipartisan “Gang of Six” health-care-reform committee, has brought in $1.5 million since he began holding healthcare hearings in 2007. In May, 13 doctors and nurses were arrested for showing up at Senate hearings to demand that Baucus allow single-payer advocates to be heard. Earlier this summer, the senator charged $2,500 a head to lobbyists and execs wanting his ear during the 10th annual Baucus golf and fly-fishing retreat in Big Sky, Montana, his home state. If your congressman isn’t busy cashing checks, or taking appointments with lobbyists, he’s probably busy getting shouted down at a town hall somewhere.<br /><br />With the Democrats message dead on arrival, once again the reform-minded are proving to be no match for the cyclopean assault unleashed by the biggest industry in America. Health-care companies have mobilized at least 50,000 of their employees to write letters and attend town-hall meetings, on the premise that their industry faces a grave existential threat. The insurers’ leading lobby, America’s Health Insurance Plans (A.H.I.P.), prepared a “Town Hall Tips” memo, urging them to remain calm and not shout at members of Congress. A.H.I.P.’s president, Karen Ignagni, told The Wall Street Journal that town-hall meetings are an opportunity for industry employees “to strongly push back against charges that we have very high profits.” I wonder how many of them are on the lists of $500,000-a-year-plus employees due on Rep. Henry Waxman’s desk last week.<br /><br />In his speech to Congress, President Obama sowed the seeds of compromise, delivering a watered-down, three-point plan for health-care reform: 1) compel insurance companies to treat their customers more fairly; 2) create an insurance “exchange” of affordable health plans for individuals and small businesses; and 3) require everyone to carry basic health insurance in the same way car insurance is mandatory.<br /><br />By making health insurance compulsory for 46 million Americans, Obama’s plan could be a boon to hospitals and hospital-equipment-makers. “The expected spending could positively affect the top-line growth of many healthcare providers” was rating agency Moody’s assessment. Insurance companies also stand to do very well, particularly if a public option doesn’t come to pass. Even if it does, the president reassured the industry that in any event the Congressional Budget Office has estimated that fewer than 5 percent of Americans would sign up for it. The flood of government-compelled premiums could generate $1 trillion in revenue for health insurers over the next decade. Health-insurance stocks spiked the day after Obama’s speech, signaling approval of the direction the White House is steering the conversation. Over the past three months, Humana shares have gone up 26 percent, Aetna’s stock is up 21 percent, and UnitedHealth has gained 7 percent.<br /><br />The administration’s plan could also mean a windfall for medical-supply companies, testing labs, and drugmakers. In July, the perennial Harry and Louise returned to the airwaves, but this time they’re bankrolled by Big Pharma and are advocating for reform. Why? Because “drug and insurance companies stand to benefit when tens of millions more Americans have coverage,” as President Obama said in June. The drug companies put a dollar figure on the potential benefit, offering to invest $80 billion in the president’s plan, in the form of Medicare discounts and other concessions over the next decade. Republican senator Olympia Snowe, a member of the Gang of Six and a key figure in the debate, thinks it’s a wise investment. “The savings offered here appear to be more than offset by new drug sales,” she told the Associated Press. In early August, as a worrisome proposal that would allow the government to negotiate drug prices was making the rounds in the House, Big Pharma flexed its muscles, demanding the White House explicitly acknowledge that drug companies wouldn’t be on the hook for anything beyond the agreed-upon $80 billion. The White House obeyed.<br /><br />Despite the boorish antics of Joe Wilsons everywhere, the American people’s support for fundamental health-care reform remains steadfast. Depending on who’s doing the polling, between two-thirds and three-quarters of Americans support a public option and up to 75% want to see more regulation of insurance companies. With this kind of mandate, the fight is the Democrats’ to lose.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-38489232030421715682009-10-12T21:42:00.001-07:002009-10-12T21:42:36.726-07:00Premiums Would Go Down If Insurance CEOs Took a Pay CutOriginal Link: <a href="http://thebagofhealthandpolitics.wordpress.com/2009/10/12/premiums-would-go-down-if-insurance-ceos-took-a-pay-cut/">http://thebagofhealthandpolitics.wordpress.com/2009/10/12/premiums-would-go-down-if-insurance-ceos-took-a-pay-cut/</a><br /><br />By thebagofhealthandpolitics<br /><br />America’s Health Insurance Plan–the lobbying arm for billionaire insurance CEOs–is beginning to spread disinformation about health care reform. They claim that premiums would go up because the Senate Finance Committee bill would make insurance too affordable for them to provide services at their current levels. Of course keeping things the same means keeping CEOs compensated at obscene levels, spending hundreds of millions of dollars on corporate jets, and continuing to maximize profits by minimizing ill Americans access to the doctor.<br /><br />Insurers spend up to 40 cents of every dollar (pdf) on “administrative costs.” This bland term hides outrageous compensation, like the $1.1 billion severance package former United Health Care Group CEO Bill McGuire got. It also hides outrageous and immoral practices–like WellPoint’s habit of paying five-figure bonuses to employees who figure out how to stop a cancer patient’s treatment.<br /><br />Insurers do these things to meet Wall Street’s expectations. Wall Street expects profits to continually grow. They expect bigger dividends and higher stock prices with each passing year. They expect companies to avoid spending money on “uneccessary” items.<br /><br />But Wall Street has also defined lavish executive salaries and obscene bonuses as “neccessary to retain top talent.” Thus Wall Street sees nothing wrong with a society where the highest earners make 400 times more than the average family.<br /><br />Of course if these “talented” minds actually felt like earning their paycheck, they’d think about the problems the middle class is having in this economy, and they’d quickly conclude that too much money is going to the top, leaving the middle class–the foundation of our economy–without enough money to meet basic needs. That, in turn, causes the middle class to reduce spending, which causes businesses to reduce production and lay off middle class workers, which causes more middle class people to reduce spending. It’s a sad feedback loop that the economy is stuck in. In short, an economy that lacks a strong foundation will inevitably collapse in on itself.<br /><br />When applied to health insurance, paying for the salaries and bonuses of “talented” individuals like Bill McGuire means trying to shift the cost of medical care onto the middle class. An insurer in Texas dropped a cancer patient because she failed to disclose a previous case of acne on her insurance application. No insurer in Tennessee would cover a young Lupus patient.<br /><br />Without the money to continue expensive, life-saving treatments, both of these patients put off proper care. The cancer spread to stage IV, and may ultimately claim the life of Robin Beaton. Nikki White ended up in the hospital where the state spent over a million dollars on 15 surgeries that were done in a desperate efforts to save Nikki’s life. In the end, she died at the age of 32 from what her doctor termed “complications secondary to a failed health care system.”<br /><br />Tennessee Governor Phil Bredesen (D)–who pushed through health care cuts that had a huge negative impact on Nikki White’s treatment–was an insurance executive before entering politics. He amassed a fortune of between $100 million and $250 million before entering politics. He is now opposing health care reform because he thinks it would cost state governments too much money.<br /><br />The state-based CEOs of Blue Cross–a company which has been found to tie good performance evaluations to the dropping of high-cost policy holders like Robin Beaton–earn as much as 16 million a year, even when their plan’s income decreases and their membership declines.<br /><br />Deep down, Karen Ignagni knows that her rent-a-study just defends the sorrid status quo. Insurers and their lackeys on K Street are defending a system in which the coddling of high-powered executives is more important than getting proper, life-saving care to the people who need it. They are defending a system in which small business–who would like to provide insurance and peace of mind to their employees–are priced out of the insurance market.<br /><br />In short, they’re defending a failed system. And they’re doing that because they profit mightily off of the struggles of small businesses, hard-working American families, and Americans who just need to see the doctor in order to become productive, high-earning citizens. I don’t need to tell you this by now, but the “study” AHIP commissioned isn’t credible.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-1419062614131788612009-10-11T16:17:00.000-07:002009-10-11T16:39:49.789-07:00Democrats with gutsOriginal Link: <a href="http://www.guardian.co.uk/commentisfree/cifamerica/2009/oct/06/alan-grayson-healthcare-democrats">http://www.guardian.co.uk/commentisfree/cifamerica/2009/oct/06/alan-grayson-healthcare-democrats</a><br /><br />By Sahil Kapur<br /><br />Congressman Alan Grayson's fighting talk gave Republicans a taste of their own bitter medicine on healthcare reform<br /><br />Democratic congressman Alan Grayson beat the Republicans at their own game last week, when he ripped into them for dragging their feet on the American healthcare crisis. On the floor of the House of Representatives, he summarised the Republican healthcare plan as: "Don't get sick, and if you do get sick, die quickly." It has caught Republicans like a deer in the headlights, understandably so because Republicans are not used to Democrats with guts.<br /><br />Far from surrendering to immediate Republican outrage and demands for apology, Grayson stood firmly by his stance, teasing his opponents that he'll apologise, but "to the dead and their families" for government's failure to improve the system. In fact, Grayson has since stepped up his rhetoric in a recent media blitz, calling Republicans "knuckle-dragging Neanderthals" and "a lie factory" whose only approach to policy is obstructionism. By failing to produce a counter-proposal in the following days, Republicans have effectively proven Grayson's point.<br /><br />This kind of pugnacious spirit is common among Republicans but very rare among Democrats, which is largely why Democrats so often get trampled in legislative battles where they have the upper-hand politically, intellectually, morally, historically and in opinion polls. Grayson's star power has surged since his remarks. While the GOP has designated him public enemy number one, Grayson has lit up the Democratic base.<br /><br />What's unique about Grayson is that he's passionate about championing liberal causes, and he forcefully calls out the lies of his Republican opponents and the vapidity of today's conservative movement. With the significant rightward shift of the Democratic party in the last few decades, progressives are hardly represented in American government any longer. Though there are a few notable exceptions, none have quite the determination Grayson showed this week.<br /><br />In the last 30 years, Republicans have yanked America further to the right than was once conceivable. Democrats have been complicit in this. Many Democrats sat idly by – if not supported – Republicans starting unnecessary and destructive wars, violating the Constitution and international law, redistributing wealth upward from the working poor to the rich, letting tens of millions lose their health care, and actively ignoring the threat of global climate change.<br /><br />Democrats have effectively allowed Republicans to elide the word "liberal" from an adjective into a smear. This continues today, despite the fact that conservatives have steered America to one of its darkest places yet. President Obama's self-consciously conciliatory approach plays right into this meme. The zeal with which Republicans continue to promote their agenda, despite its immense failures, provides a stark contrast to the tepid Democratic spirit.<br /><br />This is why Grayson is not a typical Democrat, and why he's exactly what Democrats have needed for a long time. The party dominates the House of Representatives, has a filibuster-proof majority in the Senate, and boasts a popular president – yet continues to get pushed around the bullied by the GOP, which is less popular than ever and has no serious proposals for solving today's problems. What gives? A lack of fortitude.<br /><br />Capping an era of great political cynicism and unprecedented domination of money in politics, progressives have lost their footing and have tumbled behind conservatives, facing an increasingly steeper mountain to climb as Democrats continue to capitulate to the perpetrators of these quandaries. In an age where campaign contributions from wealthy, narrow interest groups are so critical to political survival, the incentive for ordinary Democrats is to play the game, not change it.<br /><br />With the Democratic party slowly morphing into a watered-down Republican party, progressives have grown increasingly cynical of politics. Many feel little incentive to vote or participate in the political process. A Grayson-like fervor for liberal causes can help recapture this waning enthusiasm, perhaps eventually motivating Democrats to be real progressives again.<br /><br />The internet age provides as much potential for political self-harm as it does opportunity, but Grayson seems happy to take the heat. Democrats need representatives who genuinely believe in liberal values, who have the courage to fight for their beliefs, and who won't prioritise political expediency over doing their job the right way. "We need Democrats with guts," Grayson said of the whole matter. He's right.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0tag:blogger.com,1999:blog-7288510634460787216.post-68562809175512027632009-10-11T15:40:00.000-07:002009-10-11T15:42:20.818-07:00The Politics of SpiteOriginal Link: <a href="http://www.nytimes.com/2009/10/05/opinion/05krugman.html">http://www.nytimes.com/2009/10/05/opinion/05krugman.html</a><br /><br />By PAUL KRUGMAN<br /><br />There was what President Obama likes to call a teachable moment last week, when the International Olympic Committee rejected Chicago’s bid to be host of the 2016 Summer Games.<br /><br />“Cheers erupted” at the headquarters of the conservative Weekly Standard, according to a blog post by a member of the magazine’s staff, with the headline “Obama loses! Obama loses!” Rush Limbaugh declared himself “gleeful.” “World Rejects Obama,” gloated the Drudge Report. And so on.<br /><br />So what did we learn from this moment? For one thing, we learned that the modern conservative movement, which dominates the modern Republican Party, has the emotional maturity of a bratty 13-year-old.<br /><br />But more important, the episode illustrated an essential truth about the state of American politics: at this point, the guiding principle of one of our nation’s two great political parties is spite pure and simple. If Republicans think something might be good for the president, they’re against it — whether or not it’s good for America.<br /><br />To be sure, while celebrating America’s rebuff by the Olympic Committee was puerile, it didn’t do any real harm. But the same principle of spite has determined Republican positions on more serious matters, with potentially serious consequences — in particular, in the debate over health care reform.<br /><br />Now, it’s understandable that many Republicans oppose Democratic plans to extend insurance coverage — just as most Democrats opposed President Bush’s attempt to convert Social Security into a sort of giant 401(k). The two parties do, after all, have different philosophies about the appropriate role of government.<br /><br />But the tactics of the two parties have been different. In 2005, when Democrats campaigned against Social Security privatization, their arguments were consistent with their underlying ideology: they argued that replacing guaranteed benefits with private accounts would expose retirees to too much risk.<br /><br />The Republican campaign against health care reform, by contrast, has shown no such consistency. For the main G.O.P. line of attack is the claim — based mainly on lies about death panels and so on — that reform will undermine Medicare. And this line of attack is utterly at odds both with the party’s traditions and with what conservatives claim to believe.<br /><br />Think about just how bizarre it is for Republicans to position themselves as the defenders of unrestricted Medicare spending. First of all, the modern G.O.P. considers itself the party of Ronald Reagan — and Reagan was a fierce opponent of Medicare’s creation, warning that it would destroy American freedom. (Honest.) In the 1990s, Newt Gingrich tried to force drastic cuts in Medicare financing. And in recent years, Republicans have repeatedly decried the growth in entitlement spending — growth that is largely driven by rising health care costs.<br /><br />But the Obama administration’s plan to expand coverage relies in part on savings from Medicare. And since the G.O.P. opposes anything that might be good for Mr. Obama, it has become the passionate defender of ineffective medical procedures and overpayments to insurance companies.<br /><br />How did one of our great political parties become so ruthless, so willing to embrace scorched-earth tactics even if so doing undermines the ability of any future administration to govern?<br /><br />The key point is that ever since the Reagan years, the Republican Party has been dominated by radicals — ideologues and/or apparatchiks who, at a fundamental level, do not accept anyone else’s right to govern.<br /><br />Anyone surprised by the venomous, over-the-top opposition to Mr. Obama must have forgotten the Clinton years. Remember when Rush Limbaugh suggested that Hillary Clinton was a party to murder? When Newt Gingrich shut down the federal government in an attempt to bully Bill Clinton into accepting those Medicare cuts? And let’s not even talk about the impeachment saga.<br /><br />The only difference now is that the G.O.P. is in a weaker position, having lost control not just of Congress but, to a large extent, of the terms of debate. The public no longer buys conservative ideology the way it used to; the old attacks on Big Government and paeans to the magic of the marketplace have lost their resonance. Yet conservatives retain their belief that they, and only they, should govern.<br /><br />The result has been a cynical, ends-justify-the-means approach. Hastening the day when the rightful governing party returns to power is all that matters, so the G.O.P. will seize any club at hand with which to beat the current administration.<br /><br />It’s an ugly picture. But it’s the truth. And it’s a truth anyone trying to find solutions to America’s real problems has to understand.Lone Starhttp://www.blogger.com/profile/08631632932309662520noreply@blogger.com0