Sunday, November 30, 2014

Elizabeth Warren's Criticism of Obama's Bankers is Making the WaPo Editorial Board Very Nervous

On Friday, the New York Times did some editorializing in the Business section to defend Obama's nominee for deputy undersecretary to the Treasury for domestic finance, Democratic bundler and investment banker Antonio Weiss, from his liberal critics.

The debate about Weiss began with an op-ed by Elizabeth Warren in the Huffington Post a week and a half ago, entitled "Enough Is Enough: The President's Latest Wall Street Nominee." Warren criticized Weiss both for his lack of qualifications for the position itself and for the regulatory and cognitive capture reflected by the administration's nominees.

Since Warren stated her opposition to Weiss, Bernie Sanders and Dick Durbin have also gone on record opposing his nomination.

However, the opposition has taken a lot of elites by surprise, since they are used to seeing their friends on Wall Street get confirmed easily for job after job.

The Washington Post editorial board, in particular, is getting both nervous and angry, as shown in an editorial today: "An Obama nominee falls prey to a populist witch hunt."

Let's dissect the editorial.

The editorial board begins with a "history lesson."
IF THE history of American populism teaches anything, it is the importance of addressing the legitimate concerns of the lower and middle classes without engaging in illegitimate vilification of the well-to-do or anyone else. From Andrew Jackson to Huey Long, populists have given voice to the voiceless — but also have played on prejudice, stereotypes and resentment.
Because the Washington Post editorial board is the arbiter of which concerns are "legitimate" and which are not. 
It is true that populism (which is neither inherently democratic nor progressive--hence the need for modifiers when using it) can play on "prejudice, stereotypes, and resentment," but the "victims" about which the Washington Post are most concerned are the "well-to-do." And they are also the arbiters of which criticisms of the "well-to-do" are legitimate and which are not.
And when in American history have horrible things resulted from "vilification" of the rich? Do you remember when Obama spoke of the "fat cats" on Wall Street? A few bankers got their feelings hurt. It was a national tragedy.
Let's go on.
That is the lens through which to view the current flap over President Obama’s choice of Antonio Weiss to serve as undersecretary of Treasury for domestic finance, a senior position with broad responsibility over financial institutions, the federal debt, regulation and capital markets. The 48-year-old Mr. Weiss would bring much in the way of relevant experience to the job, having graduated from Harvard Business School and gone on to a successful career in finance, most recently as head of investment banking for the venerable Lazard firm. If there’s anything anomalous on paper about this appointment, it might be the fact that Mr. Obama has chosen a veteran of eight years in Lazard’s Paris office for a domestic finance job.
"The venerable Lazard firm." 

Somehow a degree from HBS and a career in global finance gives you the experience for a regulatory position in domestic finance. Rich people are just brilliant like that.
That is not the main concern of Mr. Weiss’s detractors within the populist wing of the Democratic Party, though. Led by Sen. Elizabeth Warren (D-Mass.), they criticize the symbolism of Mr. Weiss’s nomination, which, according to Ms. Warren, “tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first.” Mr. Weiss stands accused of having played an advisory role in the recent merger between Burger King and the Canadian company Tim Hortons — a “tax inversion” deal allegedly driven by Burger King’s desire to escape U.S. corporate levies.
The WaPo editorial board seems to have missed the fact that this lack of experience with domestic finance was, in fact, one of the things Warren highlighted in demonstrating his inappropriateness for the position. 

He either played an advisory role or did not. The Washington Post can determine that. It does not need to use the modifier "accused."
To be sure, Mr. Weiss has reported assets of between $54 million and $203 million, and he has given tens of thousands of dollars to Mr. Obama’s campaigns while persuading others to give much more. This confirms that he, like other Obama nominees — say, Commerce Secretary Penny Pritzker — is wealthy and politically connected. Whether any of that or his advisory role in the Burger King deal should disqualify him is a very different question. To the extent we know anything about Mr. Weiss’s actual policy views, they seem consonant with Ms. Warren’s. For example, he is a co-author of a Center for American Progress tax reform paper that called for a more progressive system and $1.8 trillion in tax increases on upper-income Americans over 10 years.
He supports higher taxes on rich people. She supports higher taxes on rich people. It's like they're the same person!
The populists’ case against Mr. Weiss so far amounts to a grab-bag of symbolism and epithets, not a rationale. Nothing in his record suggests that his nomination is less than ordinarily worthy of the deference the Senate owes, or ought to owe, the president when staffing an administration. At the very least, Mr. Weiss deserves a fair hearing, in which he can publicly respond to the accusations against him, such as they are.
Other than that his job experience isn't relevant or that he was overseeing the tax avoidance schemes that Democrats have been criticizing lately.... 

And no one is stopping him from publicly responding. Warren wrote an op-ed in the Huffington Post. I'm sure he could, too, if he wanted. He might even be friends with Arianna Huffington.
If his critics are genuinely interested in judging him as an individual, rather than as a purported representative of a predatory class, a fair hearing is what they’ll give him. Anything less would be populism at its irrational worst.
The Washington Post editorial board will not have this criticism of the "venerable" men of Wall Street! 

This editorial just perfectly reflects the ideology of the soi-disant centrist "liberal" elites in Washington.

Saturday, November 29, 2014

Senate Dems Add Mark Warner to Leadership Team to "Counterbalance" Elizabeth Warren

A week ago, we learned that Chuck Schumer (D-Wall Street) had pushed for including Mark Warner in the Senate Democratic leadership team in order to counterbalance Elizabeth Warren.

The bankers whom Schumer views as his #1 constituency are not fond of Warren. You can see that in the current fight over Obama Treasury nominee Antonio Weiss. But the bankers love Mark Warner.
Mark Warner was named a "fiscal hero" by Fix the Debt because of how obsessed he is with pushing an austerity agenda:
“We must be willing to put everything on the table, move past partisan gridlock and come together with meaningful solutions that will help put our economy on a more fiscally responsible path,“ Sen. Warner said. “I’m honored to be recognized by the nonpartisan Campaign to Fix the Debt. I remain committed to working to responsibly reduce spending, reform our tax code to generate new revenue and strengthen entitlement programs so they will still exist for the next generation of Virginians and Americans.”
“Mark Warner stands out as a true leader on fiscal responsibility,” said Maya MacGuineas, head of the Campaign to Fix the Debt. “He has been tireless in his efforts to educate the country about the need to pass a comprehensive debt deal, both with the Gang of Six and other bipartisan groups in the Senate and House. Sen. Warner has helped keep a spotlight on this critical issue even when others have backed away from the hard choices involved in fixing the debt. There is much more to be done to confront our nation's debt challenges, and it is important to recognize leaders such as Sen. Warner who remain focused on these issues.”

In late 2010, Sen. Warner cofounded the Senate’s so-called “Gang of Six,” a bipartisan group of Senators which worked for nearly two years on a framework that would reduce deficits and debt by almost $4 trillion over 10 years. However, events related to the debt ceiling and the appointment of the “supercommittee” in the Fall of 2011 prevented the Gang of Six framework from receiving a vote by Congress.
Mark Warner even touted his desire to cut Social Security and Medicare on his campaign site:
As a freshman senator, Mr. Warner showed guts by defying large chunks of his Democratic base to support trimming entitlements such as Social Security and Medicare in order to forge a deal. By contrast, his Republican challenger, Ed Gillespie, a smart and savvy Washington insider, has promised never to compromise by backing new revenue in order to tackle the nation’s fiscal problems in a balanced way.
Because of a platform that combined bromides about "bipartisanship" and calls for austerity--and a lack of campaigning--Mark Warner managed to turn a 12 point polling lead to a near loss on Election Day.

Mark Warner took his near loss--and the loss of a number of his colleagues--as an opportunity to double-down on the austerity agenda:
“This election reenergized me,” Warner told the Post. “There’s going to be a different framework now, and in many ways, for somebody kind of in the middle who’s about building bipartisan coalitions, there may even be more opportunities for me … I’m looking forward to that.”
And he voted against Harry Reid for Majority Leader because Reid's not being bipartisan enough for him.

What do the Dems do with this lackluster candidate, Wall Street shill, and right-wing defector?
They promote him!
Senate Democratic leaders are promoting business friendly moderate Sen. Mark Warner of Virginia to their leadership team, where he will counterbalance rising liberal star Sen. Elizabeth Warren (D-Mass.).
Sen. Charles Schumer (D-N.Y.), the third-ranking member of the Senate Democratic leadership, announced Friday that Warner will serve as a policy development adviser to the Democratic Policy and Communications Committee.

"I look forward to working with my colleagues to make the U.S. Senate a place where real work gets done to solve the challenges facing the American people,” he said. “Offering a constructive critic a seat at the leadership table is a positive step."
Warner, who has strong pro-business credentials, will serve as a counterweight to Warren, who has built an enthusiastic following among the party’s liberal base as a sharp critic of Wall Street.
“Mark is a natural leader in our caucus who will bring a diverse experience of both private sector and public service work to this new role,” he said. “In the next Congress, Mark will work closely with the entire DPCC team to put forward policies and a message that resonate strongly with America’s middle class.”
Aren't you excited that a Fix the Debt hero is going to be in the leadership team crafting the Democrats' policy agenda and messaging strategy? Because the route to 2016 clearly lies in an agenda of Social Security cuts, cliched calls for bipartisanship, and deference to Wall Street and large corporations.

Friday, November 28, 2014

Interesting Definition of "Liberal" You Got There, New York Times

This morning, the New York Times had an article about Obama's nominee for under secretary of the Treasury for domestic finance, Antonio Weiss: "Liberal Treasury Nominee’s Wall St. Prowess May Be a Vulnerability."

You probably read Elizabeth Warren's op-ed stating her opposition to Weiss last week. Let me excerpt it to refresh your memory on this "liberal" nominee:
So who is Antonio Weiss? He's the head of global investment banking for the financial giant Lazard. He has spent the last 20 years of his career at Lazard -- most of it advising on international mergers and acquisitions.
That raises the first issue. Weiss has spent most of his career working on international transactions -- from 2001 to 2009 he lived and worked in Paris -- and now he's being asked to run domestic finance at Treasury. Neither his background nor his professional experience makes him qualified to oversee consumer protection and domestic regulatory functions at the Treasury. As someone who has spent my career focused on domestic economic issues, including a stint of my own at the Treasury Department, I know how important these issues are and how much the people in Treasury can shape policies. I also know that there are a lot of people who have spent their careers focused on these issues, and Weiss isn't one of them.
The second issue is corporate inversions. Basically, a bunch of companies have decided that all the regular tax loopholes they get to exploit aren't enough, so they have begun taking advantage of an even bigger loophole that allows them to maintain their operations in America but claim foreign citizenship and cut their U.S. taxes even more. No one is fooled by the bland words "corporate inversion." These companies renounce their American citizenship and turn their backs on this country simply to boost their profits.
One of the biggest and most public corporate inversions last summer was the deal cut by Burger King to slash its tax bill by purchasing the Canadian company Tim Hortons and then "inverting" the American company to Canadian ownership. And Weiss was right there, working on Burger King's tax deal. Weiss' work wasn't unusual for Lazard. That firm has helped put together three of the last four major corporate inversions that have been announced in the U.S. And like those old Hair Club commercials used to say, Lazard isn't just the President of the Corporate Loopholes Club -- it's also a client.
Lazard moved its own headquarters from the United States to Bermuda in 2005 to take advantage of a particularly slimy tax loophole that was closed shortly afterwards. Even the Treasury Department under the Bush administration found Lazard's practices objectionable.
The White House and Treasury have strongly denounced inversions, and rightly so. But they undercut their own position by advancing Mr. Weiss. Already Senator Grassley has denounced the move as hypocritical, and Senator Durbin has expressed his opposition to the nomination over the inversion issue. The Independent Community Bankers of America, which represents smaller banks from across the country, has opposed the nomination as well -- only the second time in thirty years that they have publicly opposed a presidential nomination.
She then goes on to criticize Obama for filling his cabinet with Wall Street executives:
The over-representation of Wall Street banks in senior government positions sends a bad message. It tells people that one -- and only one -- point of view will dominate economic policymaking. It tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first. That's yet another advantage that Wall Street just doesn't need.
Bernie Sanders has also publicly opposed Weiss's nomination:
“The Wall Street crash of 2008, caused by the greed and illegal behavior of major financial institutions, created the worst recession in modern history. We need an economic team at the White House which will hold Wall Street accountable and fight for the needs of working families, not more Wall Street executives,” Sanders said. “The American people are disgusted with Wall Street bankers who find loopholes in the tax code to help profitable companies shelter profits in offshore tax havens in order to avoid paying their fair share of U.S. taxes. We need economists in government who have a history of helping to create jobs, not helping corporations avoid taxes."
DealBook's Andrew Ross Sorkin, who is a mouthpiece for Wall Street, criticized Elizabeth Warren for opposing Weiss earlier this week. 
And now the New York Times is editorializing in its Business section to defend Weiss from attacks from the liberal wing of the Democratic Party.

You see, Weiss is clearly "liberal" because he's given a lot of money to the Democratic Party and once wrote a white paper calling for higher taxes on the rich. Progressives are making a big deal out of nothing, implies the New York Times.
In 2012, Antonio F. Weiss took his 15-year-old son, Nico, from the gilded aerie of their Manhattan apartment on Central Park West to Cleveland to canvass for President Obama’s re-election. Mr. Weiss, 48, was also the co-author of a white paper calling for higher taxes on the rich and has donated hundreds of thousands of dollars to the Democratic Party.
Here's the New York Times parroting the view of the bankers:
If the Elizabeth Warren wing of the party can bring Mr. Weiss down, they say, prominent financiers may no longer play a significant role in Democratic administrations, which have turned to them since the Clinton years to bolster their business bona fides.
Prominent financiers not wanting to be in Democratic administrations? That's a bad thing, why? And here's the New York Times further trying to lay out the "liberal" case for Weiss:
Moreover, Mr. Weiss’s defenders in and out of the administration say he is being caricatured as a rapacious banker when he is more Daddy Warbucks than Gordon Gekko. He combines financial expertise with an unquestioned liberal outlook and an intellectual panache that led to his becoming publisher of The Paris Review.
Neera Tanden, president of the Center for American Progress, a Democratic research and advocacy group, recalled Mr. Weiss working on an economic policy paper for her organization that called for sharply higher taxes on the wealthy, an overhaul of the corporate tax code that would raise revenue for deficit reduction and changes to the individual tax code to make it more progressive.
Gene B. Sperling, a former senior economic policy maker in the Obama and Clinton White Houses, said: “He has a good progressive heart. He has hardheaded practical business experience.”
Tanden and Sperling were both vocal champions of the administration's turn toward austerity. The Center for American Progress is good on a number of issues, but they still raise money from Goldman Sachs, Citigroup, and Bank of America--and the impact on its policies shows. Sperling is one of the most avid supporters of cutting social insurance programs in the administration. 

But never mind all that. The New York Times thinks that Weiss is just the man for the job.

Thursday, November 27, 2014

The Looting Our Politicians Don't Condemn

Over the last couple of days, we've seen politicians, most notably President Obama, condemn the acts of looting that have taken place amidst the protests against the miscarriage of justice in Ferguson and the systemic racial biases and abuses in policing. However, not all looting is created equal in the eyes of our politicians. While many will condemn what they'll be seeing on CNN this week, they are mostly quite fine with a larger-scale epidemic of looting.

For instance, if looting a Burger King is bad, then one would think that looting the whole company should be even worse.
In 2002, Goldman Sachs, along with two private equity firms, TGP and ... hmmm ... Bain Capital, teamed up to buy Burger King. This is exactly the kind of situation private equity firms like to trumpet: taking over a downtrodden company and nursing it back to health. And to get them their due, Burger King’s new owners did some good, stabilizing both the company and the franchisees, many of whom were in worse shape than Burger King itself.
But the private equity investors also cut themselves an incredibly sweet deal. Their $1.5 billion purchase price included only $210 million of their own money; the rest was borrowed. They immediately began taking out tens of millions of dollars in fees. Four years later, they took Burger King public. But, first, they rewarded themselves with a $448 million dividend. In all, according to The Wall Street Journal, “the firms received $511 million in dividend, fees, expense reimbursements and interest” — while still retaining a 76 percent stake.
In 2010, Bain, Goldman and TPG cashed out, selling Burger King to 3G Capital, for $3.3 billion. In sum, the original private equity troika reaped a fortune by selling a company that was in nearly as much trouble as it had been when they first bought it. Surely this represents the apotheosis of financial engineering.
What has 3G done? According to Howard Penney, the managing director at Hedgeye, it has prettied up the pig by laying off a large percentage of the staff in Burger King’s Miami headquarters. Burger King’s owners grew earnings, he said, “by cutting expenses. They have not improved the business one iota.” And, of course, 3G pulled out fees and dividends, too. In all, Penney wrote recently, private equity firms have taken for themselves “$1 billion or more in capital that could have been used to improve the company’s relative standing versus its competitors, many of whom Burger King struggles to keep up with.”
Private equity is, in its essence, legalized looting. But we don't see politicians condemn it, except occasionally in campaign rhetoric never designed to be matched with meaningful reforms. And then there's the issue of the looting of pension funds, often ignored as a scandal because both Democrats and Republicans are doing it.

Matt Taibbi had an excellent expose on this in Rolling Stone last year. I recommend that you read it in full if you have not done so already. Here are the key themes:
1)     Many states and cities have been under-paying or non-paying their required contributions into public pension funds for years, causing massive shortfalls that are seldom reported upon by local outlets.
2)     As a solution to the fiscal crises, unions and voters are being told that a key solution is seeking higher yields or more diversity through "alternative investments," whose high fees cost nearly as much as the cuts being demanded of workers, making this a pretty straightforward wealth transfer. A series of other middlemen are also in on this game, siphoning off millions in fees from states that are publicly claiming to be broke.
3)     Many of the "alternative investments" these funds end up putting their money in are hedge funds or PE funds run by men and women who have lobbied politically against traditional union pension plans in the past, meaning union members have been giving away millions of their own retirement money essentially to fund political movements against them.
And here's a quick example from Rhode Island, where the white-collared looter's best friend--Gina Raimondo--recently became governor:
Nor did anyone know that part of Raimondo's strategy for saving money involved handing more than $1 billion – 14 percent of the state fund – to hedge funds, including a trio of well-known New York-based funds: Dan Loeb's Third Point Capital was given $66 million, Ken Garschina's Mason Capital got $64 million and $70 million went to Paul Singer's Elliott Management. The funds now stood collectively to be paid tens of millions in fees every single year by the already overburdened taxpayers of her ostensibly flat-broke state. Felicitously, Loeb, Garschina and Singer serve on the board of the Manhattan Institute, a prominent conservative think tank with a history of supporting benefit-slashing reforms. The institute named Raimondo its 2011 "Urban Innovator" of the year.
The state's workers, in other words, were being forced to subsidize their own political disenfranchisement, coughing up at least $200 million to members of a group that had supported anti-labor laws. Later, when Edward Siedle, a former SEC lawyer, asked Raimondo in a column for how much the state was paying in fees to these hedge funds, she first claimed she didn't know. Raimondo later told the Providence Journal she was contractually obliged to defer to hedge funds on the release of "proprietary" information, which immediately prompted a letter in protest from a series of freaked-out interest groups. Under pressure, the state later released some fee information, but the information was originally kept hidden, even from the workers themselves. "When I asked, I was basically hammered," says Marcia Reback, a former sixth-grade schoolteacher and retired Providence Teachers Union president who serves as the lone union rep on Rhode Island's nine-member State Investment Commission. "I couldn't get any information about the actual costs."
And Wall Street has also been looting local governments. The recent situation of Chicago Public Schools is illustrative:
CPS took out a series of auction rate securities, which they then linked together with interest rate swaps, and the idea was, it was pitched to CPS as a way to get a cheaper interest rate than taking out a traditional fixed-rate bond. A hypothetical example would be that if you were to take out a fixed-rate bond it might cost you 8 percent and the banks were basically saying that if you do this complicated scheme that involves all these auction rate securities and interest rate swaps and a few other things, you can essentially lock in a synthetic fixed rate of 6 percent, which is cheaper than 8 percent, and so you can save some money.
The problem was that there were a lot of risks associated with this. For instance, the 6 percent was not really a 6 percent. The synthetic fixed was actually not fixed because there were other variables in there that made it so that you weren’t really getting a fixed rate. There are traditional costs that were not properly represented to CPS. One of the other problems that existed in particular was that when the banks projected cost savings, they compared the deal to a more expensive one that CPS wouldn’t have gotten, so in this case it’s as though they made a cost-saving projection that was predicated on the idea that CPS would pay 9 percent otherwise, when, in reality, CPS would have paid 8 percent. They inflated the cost of the alternative to make it seem like a better deal.

In reality, the bigger thing is that — and this is the part that’s often lost on public officials, unfortunately — when Wall Street banks are pitching deals their No. 1 goal is not to save money for taxpayers. Their No. 1 goal is to maximize profits for themselves. In this hypothetical situation where a bank says, “You can get a fixed rate for 8 percent or a synthetic fixed for 6 percent,” the reason they’re steering you towards the 6 percent deal is that they get to charge more fees because that deal is more complex. In a traditional fixed-rate bond, if the interest rate is 8 percent the banks get to charge some fees upfront for underwriting the bond but that interest, over time, is going to the bondholders and not back to the banks. In a synthetic fixed-rate structure, the interest that’s going to go to bondholders is much, much lower and the rest of the money is actually going to the banks.
The reason why they push you into these structures that have more complex transactions and more individual deals built into them is that with each of these deals, banks get to charge fees and collect more of that money for themselves instead of it going to bondholders or anywhere else. That’s the piece that’s often lost on public officials, is that no, the bank is not looking to do you a favor. They’re looking to maximize their own profits and, ultimately, those profits are coming at the expense of taxpayers.
For an analysis of this particular epidemic of looting (and recommendations about how to fix it), check out the Roosevelt Institute's new report "Dirty Deals: How Wall Street’s Predatory Deals Hurt Taxpayers and What We Can Do About It." 

Those who loot municipalities or companies don't end up in jail. They're more likely to get a cabinet appointment.

Wednesday, November 26, 2014

The Ills of Partisanship Exist, But They Aren't What the Ron Fourniers of the World Would Tell You

According to the Sunday Shows, the Washington Post editorial board, and the likes of Ron Fournier, "partisanship" is bad. In their view, Republicans are raging conservatives, and Democrats are raging liberals, and what we need is some good, old-fashioned, split-the-baby bipartisan compromises. Like a "Grand Bargain" or two.

When the partisanship get in the way of  toxic bipartisan "compromises," it is a good thing. But partisanship can still be very damaging, particularly when it trumps policy.

For one, partisan identity can override policy preferences in voting behavior. Political scientist Lilliana Mason had an article in the Washington Post on Friday to discuss this. Why did a number of red states that voted for liberal policies or against conservative ones also vote for Republicans--and by large margins? Part of it lies in how partisan identity works. She explains,
My research suggests a key reason why this happened: our partisan identities motivate us far more powerfully than our views about issues. Although voters may insist in the importance of their values and ideologies, they actually care less about policy and more that their team wins.
This “team spirit” is increasingly powerful because our party identities line up with other powerful identities, such as religion and race. Over the last few decades, Republicans have generally grown increasingly white and churchgoing, while Democrats have become more non-white and secular. This sorting of identities makes us care even more about winning, and less about what our government actually gets done.

When social and partisan identities align, we begin to detach our votes for candidates from our policy interests. The most important thing is to stick with the team. It doesn’t matter if the team you voted for opposes the very policy you voted to enact.
Her paper Smells Like Team Spirit: How Partisan Sorting and Identity Polarize Political Behavior" is available in full online, and I recommend reading it.

Partisan identities can abstract people from policy debates. They can also shape how partisans view policies.  In his article "Party over Policy: The Dominating Impact of Group Influence on Political Beliefs," political scientist Geoffrey Cohen showed how liberals would support stringent welfare policies if told that Democrats supported them and that Republicans would support generous welfare policies if told that Republicans supported them. The effect of party reference group overrode substantive content for both groups.

We see this dynamic frequently today, as Republican will show support for environmental regulations in polls--that is, until Obama's name enters the picture. And we see how the change in White House influences attitudes toward mass surveillance. Republicans who once supported it now oppose it. Democrats who once opposed it are ambivalent are outright supportive.

A similarly dangerous aspect of this impact of partisanship over policy preferences is how it leads many Democrats to assume that Democratic politicians are doing the right thing. It becomes easier to ignore the closeness of the administration to Wall Street or how Obama killed ozone and child labor regulations. Partisan influence will not mean that Democratic voters will suddenly support gutting environmental regulations or labor regulations to appease business, but the divergence between the presumption of ideological affinity and the reality of policy might not fully register for people. Given how weak policy-related reporting is in the first place, it's very easy to trust the "team" and get on with other things. But no team should be left unquestioned.

Wednesday, November 19, 2014

GOP Uses Lame Duck Session to Launch New Attacks on the EPA--with Some Dem Help

Now that the election is over, it's time for the House Republicans to go back to one of their favorite pastimes: attacking the EPA.

Yesterday, the House voted on the so-called EPA Science Advisory Board Reform Act. The bill is designed to weaken scientific authority, increase corporate influence over EPA rulemaking, and burden the Science Advisory Board with more work to do on its already limited funds.
This bill modifies the selection requirements and operating procedures of the Science Advisory Board (SAB), which provides scientific advice to the Administrator of the Environmental Protection Agency (EPA).
Under this bill, the EPA would be required to select members for the SAB that represent a “balanced” view of scientific issues, regardless of the legitimacy of those views – exposing the Board to potentially politically motivated beliefs not grounded in actual science. Additionally, the bill would allow up to 90% of SAB members to be private-sector scientists with direct ties to the industries – opening the door for corporations to hold powerful influence over its decisions and recommendations to the EPA.

The bill would also require a number of changes to the SAB’s operation. The Board would be required to release to the public all scientific information used in determining its advisories to EPA, indicating any and all "uncertainties" associated with the scientific advice it does provide, and it must ensure that the advice it provides to EPA reflect the views of all Board members.  It also would allow the public to file public comments on those advisories and require the Board to respond to all public comments – forcing the SAB to waste time and limited funds on burdensome administrative requirements instead of actually advising the EPA on science. These additional requirements that the bill demands of the SAB are essentially designed to keep it from getting anything accomplished, especially since the bill contains no additional resources for the board to function.
The White House has already stated that it would veto the bill.

Republicans went ahead anyway. It passed the House 229 to 191 on a mostly party line vote.

Only four Democrats voted for it: John Barrow (GA-12), Jim Matheson (UT-04), Collin Peterson (MN-07), and Nick Rahall (WV-03). Matheson is retiring, and Barrow and Rahall just lost re-election.

Only one Republican voted against it: Chris Gibson (NY-19), who lives in a district with a strong conservationist presence.

Today, the House passed the Secret Science Reform Act of 2014. What is this "secret science" of which Republicans speak?

Let me let Dr. Andrew Rosenberg, director of the Union of Concerned Scientists, explain:
Today, anyone with an Internet connection, including members of Congress, can already look up which studies the agency relies on for crafting new rules. But in many cases it cannot legally publish raw data. This bill would require the agency to make all data public before creating new rules while blocking the agency from disclosing private medical data, trade secrets and industry data.
The result? The EPA would not be able to adopt any new rules to protect public health.
Under HR 4012, some of the best real-world public health research, which relies on patient data like hospital admissions, would be excluded from consideration because personal data could not, and should not, be made public. Demanding public release of full raw data the agency cannot legally disclose is simply a way to accuse the agency of hiding something when it has nothing to hide.
What matters is not raw data but the studies based on these data, which have gone through the scientific process, including rigorous peer review, safeguards to protect the privacy of study participants, and careful review to make sure there’s no manipulation for political or financial gain. As many politicians have taken pains to point out, they are not scientists, so they should listen to scientific advice instead of making spurious demands for unanalyzed data.
And to make matters worse, the CBO reported that meeting the demands of the law would cost between $10,000 and $30,000 for each scientific study used by the agency. The EPA relies on about 50,000 studies per year.

To put it simply, they want to make it more difficult for the EPA to issue rules.

The bill passed 236 to 191.

Seven Democrats voted for it:

John Barrow (GA-12)
Jim Costa (CA-16)
Henry Cuellar (TX-28)
Jim Matheson (UT-04)
Bill Owens (NY-21)
Collin Peterson (MN-07)
Nick Rahall (WV-03)

Again, Chris Gibson (NY-19) was the only Republican to oppose it.

As I noted earlier, Barrow, Matheson, and Rahall won't be returning to the 114th Congress. Neither will Owens.

The White House has already issued its intent to veto this bill should it reach the president's desk (which it won't).

Sunday, November 16, 2014

CA's AGO Argues against Court-Ordered Prisoner Release in order to Keep "Important Labor Pool"

I've heard California Attorney General Kamala Harris's name floated on many occasions for either Senate (when Boxer or Feinstein eventually retires) or Governor (when Jerry Brown retires). She is widely praised as a liberal rising star.

Or maybe not-so-liberal.....
Federal judges on Friday ordered California to launch a new parole program that could free more prisoners early, ruling the state had failed to fully implement an order last February intended to reduce unconstitutional crowding.
The judges, for a second time, ordered that all nonviolent second-strike offenders be eligible for parole after serving half their sentence. They told corrections officials to submit new plans for that parole process by Dec. 1, and to implement them beginning January.

Most of those prisoners now work as groundskeepers, janitors and in prison kitchens, with wages that range from 8 cents to 37 cents per hour. Lawyers for Attorney General Kamala Harris had argued in court that if forced to release these inmates early, prisons would lose an important labor pool.
That's right: the California Attorney General's Office argued that it couldn't release non-violent offenders because they are too valuable a source of cheap labor. $0.08-$0.37 per hour cheap. 

Rather than release non-violent offenders per the court order, Governor Jerry Brown has taken to privatizing prisons instead.

Lot of money to be made in the prison industry, isn't there?

Saturday, November 15, 2014

"Obamacare: Reducing the First Derivative of the Health Care Cost Curve!"

"Reducing the First Derivative of the Health Care Cost Curve" -- it's practically bumper sticker-worthy, right?

Well, maybe not. But it was what I thought when I read an article in Think Progress yesterday, "Obamacare Premiums To Increase By Less Than 4 Percent On Average."

According to the Center for American Progress, premium rates for the individual market in states with federally-facilitated marketplaces will rise by an average of 3.9% next year. For silver plans, the increase will be lower: 3.45% on average.

This is a significant improvement on the status quo ante; as the article points out, from 2008 to 2010, the average premium rate increase was 10.9%.

Viewed from the perspective of a technocrat or policy wonk, this is clearly a success: you are "bending the cost curve." Although the cost continues to go up, you have controlled its rate of escalation. The slope of the curve is getting smaller.

However, many people will not view the rate increase with the eye of a technocratic manager or market-fetishizing policy wonk. The 3.9% increase is just that: an increase. It is less money in your pocket.

And those rising rates are being accompanied by stagnant wages for most Americans. As of last year, 95% of income gains since the recession had gone to the top 1%. Many people have yet to feel the recovery that gets talked about on the news.

And therein lies one of the political failures of the Affordable Care Act. When people see their rates go up, their first instinct may be to blame the Affordable Care Act. (Framing in news stories doesn't help.) However, the fault lies not in what the ACA did--it lies in what the ACA didn't do, (namely, provide high-quality health coverage to all as a public good or a right). And that's a distinction that can often get lost.

Celebrating a 3.9% increase in health insurance premiums as a success because it is better than the much higher increase in the alternate reality version of 2014/2015--that without the ACA--makes one sound very removed from the experience of those struggling to get by. You're saying, "You have less money, but at least it's more than you would have had otherwise!" That's just not compelling.

Democrats often have a habit of underselling and overselling the Affordable Care Act at the same time. They undersell it by not talking enough about (or campaigning for) the most successful part--the Medicaid expansion---or explaining the many seemingly small yet very meaningful measures included to improve public health. And they oversell it by acting as though it made health care a right (you don't purchase rights on the market).

Back in 2010, some Democrats described the Affordable Care Act as a starter home for health care reform. Well, I think it is long since time to start talking about building those additions.

Low Turnout is Not Inevitable

Oregon had turnout of 69.5%---which is low for them. They surpass 80% turnout during presidential years. Vote-by-mail works.

100% turnout is difficult. Even countries with mandatory voting don't get 100% turnout. But Oregon shows that reducing barriers to voting can greatly increase participation.

Friday, November 14, 2014

Which 31 Oily Democrats Just Voted to Force the Approval of the Keystone Pipeline?

Just now, the House voted 252 to 162 to force the approval of the Keystone XL pipeline. Justin Amash (MI-03) voted present as he has frequently done with KXL bills because, while supporting the construction of the pipeline, he opposes the process by which his fellow Republicans have been going about to force its approval.

Which 31 Democrats are so bought by the oil industry that they voted with the Republican caucus?

John Barrow (GA-12)
Sanford Bishop (GA-02)
Bob Brady (PA-01)
Jim Clyburn (SC-06)
Jim Cooper (TN-05)
Henry Cuellar (TX-28)
Mike Doyle (PA-14)
Al Green (TX-09)
Gene Green (TX-29)
Ruben Hinojosa (TX-15)
Sheila Jackson Lee (TX-18)
Dan Lipinski (IL-03)
David Loebsack (IA-02)
Sean Maloney (NY-18)
Jim Matheson (UT-04)
Carolyn McCarthy (NY-04)
Mike McIntyre (NC-07)
Patrick Murphy (FL-18)
Rick Nolan (MN-08)
Donald Norcross (NJ-01)
William Owens (NY-21)
Colin Peterson (MN-07)
Nick Rahall (WV-03)
Cedric Richmond (LA-02)
David Scott (GA-13)
Terri Sewell (AL-07)
Albio Sires (NJ-08)
Bennie Thompson (MS-02)
Marc Veasey (TX-33)
Filemon Vela (TX-34)
Tim Walz (MN-01)

Bob Brady's name stands out for me as a particularly shameless one--he represents Philadelphia and some of its southwest suburbs. Donald Norcross, who represents the Philadelphia suburbs in South Jersey, was just sworn in (His predecessor--Rob Andrews--resigned back in February to become a lobbyist), and this is one of his very first votes.

Given that 162 Democrats opposed it, there is not a veto-proof majority. Recent statements from the president have indicated that he may be likely to veto the bill because it is an attempt to override his authority.

Tuesday, November 11, 2014

Steve Israel is Stepping Down from the DCCC. Who Will Replace Him? Who Should?

After the election last week, when Democrats lost over a dozen seats, Minority Leader Nancy Pelosi decided to offer Steve Israel a third term at the helm of the DCCC. Politics, as we well know, is one place where failure is consistently rewarded. Thankfully, he turned down the offer.

In 2012, as chair of the DCCC, Steve Israel was only able to net 8 seats even though Obama won re-election by 4%. Some of that was a function of Republican gerrymandering and a tendency for Democrats to aggregate in cities, where many "wasted" votes accumulate in deep blue districts. Democrats did, for instance, win a plurality of votes cast (48.8% to 47.6%). However, Democrats did run 2.3% and almost 6.3 million votes behind the president. One cannot blame failure on the design of districts: targeting and candidate selection matter a lot, too. I would recommend checking out Howie Klein of Blue America's Down With Tyranny blog for examples of bad targeting and bad candidates. They are numerous.

The electorate in 2016, a presidential year, will likely be far more favorable to Democrats than that from this year. But coasting on demographics is not a strategy. Democrats need to be able to pick good candidates and present a coherent, progressive policy vision---someone and something to vote for.

According to Politico, Jim Himes (CT-04), Jared Polis (CO-02), and Donna Edwards (MD-04) are three of the top contenders for the position.

One thing that Democrats need to do is to counter the (not entirely unjustified) perception that they are just as bought by Big Business as the Republicans. According to a Hart Research poll on Election Night, 80% of voters said that politicians from both parties "do too much to support Wall Street financial interests and not enough to help average Americans."

If Democrats want to confirm that perception, then they should put Jim Himes (D-Stamford) in charge of the DCCC.

When I first saw Himes's name, I immediately remembered that time last year when he was a lead co-sponsor of a bill written directly by Citigroup to gut regulation of derivatives.

The New York Times interviewed Himes when reporting on the bill:
The legislation, Mr. Himes said in an interview, poses no financial risk to the country. And while he is the second-largest recipient among House Democrats of financial sector donations, that is not what is compelling his vote, he said.
"It hardly determines, thank goodness, how legislators think about these issues,” said Mr. Himes, a former Goldman Sachs executive.
That last line is perfection. 
Earlier that same week, he was one of 30 Democrats to join Republicans in voting to allow your 401(k) advisor to scam you.

If Nancy Pelosi wants to tell voters that Democrats are just as much of shills for Wall Street as Republicans are, then by all means, please do put Jim Himes in charge of the DCCC.

Jared Polis, while not quite as bad, is still pretty bad. Polis consistently ranks as one of the richest members of Congress. How did he make his money?
As an 18-year-old, he traveled to Russia and made money trading privatization vouchers — you know, the botched, scandal-ridden privatization which wrecked Russia's economy and led to the domination of the economy by ex-KGB oligarchs. Next stop: Silicon Valley!
In October 1999, right before the first dotcom crash, Polis, then known as Jared Polis Schutz, sold, his family's online greeting-cards website, to Excite@Home for $780 million, including $350 million in cash that Excite couldn't really spare. Excite sold it for $35 million in September 2001, and filed for bankruptcy a month later. People still talk about it as one of the most spectacular cashouts of the dotcom boom.
He later sold ProFlowers, an online florist, to John Malone's Liberty Media. (All told, he's started a dozen companies.)
You may remember Representative Polis from when he threw a book at Diane Ravitch and called her evil. 
Why such rude behavior? Maybe it's because he owns a couple of charter schools.

He's a Democratic "education reformer" par excellence.
As a member of the “New Democratic Coalition,” Polis has consistently pushed an agenda that is as anti-teacher, anti-union and anti-public education as any group of Democrats in the nation.
This past summer Polis was pushing language to amend the reauthorization of the Elementary and Secondary Education Authorization Act (ESEA).  But rather than correct the worst elements of the bills, Polis was pushing the corporate education reformer’s agenda.
In one release, Congressman Jared Polis bragged, “We need an entrepreneurial approach to encourage high-quality, proven models of success in education.”
One of Polis’ proposed amendments would have required local schools to  “make progress towards the goal of cutting achievement gaps in half in 6 years or towards 100% proficiency, or face interventions including transformation, turnaround, restart and closure.”
Another Polis amendment would have provided, “more flexibility for charter schools to use Charter Schools Program grants” and require states and schools to “allow per-pupil revenue to be split across districts.”  [Rather self-serving coming from someone who is tapping into public funds for a charter school he himself set up].
Yet another amendment Polis co-sponsored would provide that “district and non-statewide charter authorizers as eligible entities, increase the authorization level to 330 million, and will increase the percentage of funds for expansion and replication to 20% of the overall funding.”  [Polis’ proposal being that in the face of scarce public funds, more and more taxpayer dollars should get diverted away from the public schools, and instead be used to subsidize schools like the ones he is involved in].
And where are these ideas coming from?
As the New Democrat Coalition began to prepare their amendments they proudly met with Michelle Rhee, founder of StudentsFirst, former Washington, D.C. Schools chief and confidant to non-other-than, Jeb Bush.
Another great person to show that Democrats care more about the rich than anyone else. Other names than Himes, Polis, and Edwards have been floated, but I'm solidly in support of Donna Edwards as chair of the DCCC. Edwards is a member of the Congressional Progressive Caucus and actually votes like one.

Her career background contrasts sharply with that of Himes and Polis. She was the first executive director of the National Network to End Domestic Violence and later worked for Public Citizen and the Center for a New Democracy. In 2006, Edwards primaried a seven-term Conservadem who had voted for the Iraq War and the repeal of the estate tax.

She has a solidly progressive voting record in the House, and it would be great to see an African-American woman chair the DCCC. MoveOn has a petition up now urging Pelosi to appoint Edwards.

I encourage you all to sign.

Sunday, November 9, 2014

Why I'm Not Rooting for Mary Landrieu to Win on December 6th

Earlier this week, the DSCC cancelled all of its ad buys for Mary Landrieu in the lead-up to the runoff on December 6th.

Mary Landrieu has managed to pull off odds-defying victories in runoffs in the past, and she still might win.

Like pretty much everyone on this site, I like the prospect of having a 47th seat for Team Blue. But, in this case, I'm not so sure I want it.

Let me explain.

First of all, Landrieu's victory is no longer a factor in which party controls the Senate. Republicans have--unfortunately--already cinched control.

And since it is no longer a race about who will control the Senate, it is good to think of the longer-term implications of the race. And that is where I see problems with a Landrieu victory. (Some of the following comes from a diary I wrote last year.)

After Max Baucus retired earlier this year, Ron Wyden took over the gavel of the Senate Finance Committee, freeing up the gavel for the Energy Committee. Mary Landrieu was next in line, and she was elected chair by her Democratic colleagues.

Mary Landrieu is the last Democrat one would want to be the party's highest ranking member in the Energy Committee (well, other than Joe Manchin). She has a 51% lifetime score with the League of Conservation Voters. Only six Democrats who are definitely returning to the 114th Congress have below an 80%.

Mary Landrieu has consistently been one of the top recipients of oil and gas money in the Senate. According to the Center for Responsive Politics, she is the second largest recipient of oil and gas contributions this election cycle--and the biggest Democratic recipient. She received $512,336, second only to John Cornyn (R-TX) and $50,000 more than Mitch McConnell (R-KY).

During the 2008 election cycle, she was the top congressional recipient of contributions from BP, and she went to bat for BP to get the EPA to lift the ban that prevented it from securing federal contracts.
While Mary Landrieu acknowledges climate change, she opposes any serious climate action. Last year, she criticized Obama’s climate plan for being too hard on fossil fuel industries, saying he should just approve the Keystone XL pipeline instead. Accordingly, she voted to block the EPA from issuing any such regulations. Since Obama went forward anyway—much to her dismay--she joined 43 Republican colleagues and 9 Democratic ones in lobbying the EPA to slow down the rulemaking process.

The "Energy Security" page on Landrieu's website reads as a paean to oil and gas, with only a passing reference to wind and solar (to say that natural gas is a better job creator).

Since taking the gavel of the Energy Committee, she has shepherded the passage of a bill to approve the Keystone XL pipeline, teaming up with Joe Manchin against all of the other Democrats on the committee to pass it.

Landrieu has also been a champion of increasing natural gas exports. The expansion of LNG (liquefied natural gas) terminals would increase fracking, and life cycle analyses of LNG have also shown it to be as dirty as coal.

If Mary Landrieu were to lose, then Maria Cantwell (D-WA) would become the top-ranking Democrat in the Energy Committee. Cantwell has a 90% lifetime score with the League of Conservation Voters. Since she entered the Senate in 2001, she has received a perfect score seven times and will likely get one this year as well. She has shown a consistent commitment to weaning the nation off fossil fuels and investing in the transition to a clean energy economy.

I expect Democrats to take back the Senate in 2016. That year, there will be a number of Republican freshman elected in the 2010 wave that will have to face a different, more Democratic-friendly presidential year electorate: Mark Kirk in Illinois, Pat Toomey in Pennsylvania, Ron Johnson in Wisconsin, Kelly Ayotte in New Hampshire, Rob Portman in Ohio, and Marco Rubio in Florida. Richard Burr of North Carolina could also be a target, as could Johnny Isakson in Georgia. And if Chuck Grassley and John McCain retire, Iowa and Arizona could be competitive as well.

Having a 47th member of the caucus now would make that path to 50 (or 51) much easier. But I think the prospects are already good--just as long as Democrats can get their act together.

If (or should I say when?) Democrats take back the Senate, I want them to have the ability to set out a bold and comprehensive clean energy agenda. They could take up Barbara Boxer and Bernie Sanders's Sustainable Energy Act, which has the endorsement of, the Center for American Progress, Public Citizen, and the Sierra Club.

And if we end up with a Democratic Senate but a Republican president, I want an Energy Committee chair that can serve as a bulwark against Republican energy policy. Mary Landrieu would not be such a bulwark.

The time for action on climate change is yesterday. And we don't have any chance of meaningful action in Congress for the rest of the decade if Mary Landrieu remains at the helm of the Energy Committee.

Friday, November 7, 2014

Obama and the GOP Both Want to Pass Anti-Worker Trade Deals. Which Dems Will Oppose Them?

Since the election on Tuesday, both Obama and Mitch McConnell have highlighted trade as a potential source of bipartisanship. Obama has been negotiating two large trade deals--the Trans-Pacific Partnership (TTP) and the Trans-Atlantic Trade and Investment Partnership (TTIP). Harry Reid has been hostile to these deals so far---and rightfully so, given that they are major corporate giveaways that would be bad for the environment, workers, and democracy. But Republicans, unsurprisingly, love them.

Over at the Daily Kos, I look at which Democrats we can count on to oppose such trade deals (and, implicitly, which we cannot and need to work on).

Sunday, November 2, 2014

Déjà Vu and the UN's Latest Climate Report

The UN's Intergovernmental Panel on Climate Change released a new synthesis report on the science and impacts of, and potential solutions for, climate change.

Here's a taste (excerpted from the Guardian piece linked above):
Climate change is set to inflict “severe, widespread, and irreversible impacts” on people and the natural world unless carbon emissions are cut sharply and rapidly, according to the most important assessment of global warming yet published.
The stark report states that climate change has already increased the risk of severe heatwaves and other extreme weather and warns of worse to come, including food shortages and violent conflicts. But it also found that ways to avoid dangerous global warming are both available and affordable.

… The report, released in Copenhagen on Sunday by the UN’s Intergovernmental Panel on Climate Change (IPCC), is the work of thousands of scientists and was agreed after negotiations by the world’s governments. It is the first IPCC report since 2007 to bring together all aspects of tackling climate change and for the first time states: that it is economically affordable; that carbon emissions will ultimately have to fall to zero; and that global poverty can only be reduced by halting global warming. The report also makes clear that carbon emissions, mainly from burning coal, oil and gas, are currently rising to record levels, not falling.

Droughts, coastal storm surges from the rising oceans and wildlife extinctions on land and in the seas will all worsen unless emissions are cut, the report states. This will have knock-on effects, according to the IPCC: “Climate change is projected to undermine food security.” The report also found the risk of wars could increase: “Climate change can indirectly increase risks of violent conflicts by amplifying well-documented drivers of these conflicts such as poverty and economic shocks.”
Two-thirds of all the emissions permissible if dangerous climate change is to be avoided have already been pumped into the atmosphere, the IPPC found. The lowest cost route to stopping dangerous warming would be for emissions to peak by 2020 – an extremely challenging goal – and then fall to zero later this century.
The report calculates that to prevent dangerous climate change, investment in low-carbon electricity and energy efficiency will have to rise by several hundred billion dollars a year before 2030. But it also found that delaying significant emission cuts to 2030 puts up the cost of reducing carbon dioxide by almost 50%, partly because dirty power stations would have to be closed early. “If you wait, you also have to do more difficult and expensive things,” said Jim Skea, a professor at Imperial College London and an IPCC working group vice-chair.
Ban-Ki Moon responded thusly:
“Science has spoken. There is no ambiguity in the message,” said the UN secretary general, Ban Ki-moon, attending what he described as the “historic” report launch. “Leaders must act. Time is not on our side.” He said that quick, decisive action would build a better and sustainable future, while inaction would be costly.
I couldn't help feeling a sense of déjà vu when reading this article because of how many just like it I've read over the past decade. 
A new report comes out, highlighting the dire future impacts and current realities of climate change (which both get worse each time) and sounding a clarion call for action (which gets more urgent each time).

With the new report, we'll hear UN officials, environmental groups, and liberal politicians sounding the alarm about the seriousness and severity of climate change and the need for action. Many will say, in whatever words that "the science is settled"--as it has been for a while.

We'll see appeals to "enlightened self-interest" in the business community---as though self-interest is ever enlightened.

And yet the politics remain the same. Because reports do not (and cannot) in and of themselves change political realities.

According to the Guardian, the critique that politicians tend to "engage in short-term thinking and are biased toward the status quo" was dropped from the final report.

But that is exactly why we keep getting this déjà vu. This short-termism is, in no small part, a product of the short-termism of the economic system. A new report will not change the myopia intrinsic to the profit motive. And it will not change the outsized weight of the fossil fuel industry in policymaking. The big polluters will continue to spend generously on lobbying and campaign donations, and will continue to have easy access to those crafting policy, whether in Congress or the White House--or anywhere else.

And as I noted before, when public support is broad but shallow (and malleable) and the pockets of fossil fuel companies are narrow but very, very deep, how do you think politicians will respond?

Between now and the Paris negotiations next fall, I expect to see  many new studies highlighting the direness and urgency of the situation. And I expect them to go largely unheeded. I'd like to be proven wrong.