Why There's No Outcry

robertreich

People ask me all the time why we don’t have a revolution in America, or at least a major wave of reform similar to that of the Progressive Era or the New Deal or the Great Society.

Middle incomes are sinking, the ranks of the poor are swelling, almost all the economic gains are going to the top, and big money is corrupting our democracy. So why isn’t there more of a ruckus?

The answer is complex, but three reasons stand out.

First, the working class is paralyzed with fear it will lose the jobs and wages it already has.

In earlier decades, the working class fomented reform. The labor movement led the charge for a minimum wage, 40-hour workweek, unemployment insurance, and Social Security.

No longer. Working people don’t dare. The share of working-age Americans holding jobs is now lower than at any time in the last three decades and 76 percent of them are living paycheck to paycheck.

No one has any job security. The last thing they want to do is make a fuss and risk losing the little they have.

Besides, their major means of organizing themselves — labor unions — have been decimated. Four decades ago more than a third of private-sector workers were unionized. Now, fewer than 7 percent belong to a union.

Second, students don’t dare rock the boat.

In prior decades students were a major force for social change. They played an active role in the Civil Rights movement, the Free Speech movement, and against the Vietnam War.

But today’s students don’t want to make a ruckus. They’re laden with debt. Since 1999, student debt has increased more than 500 percent, yet the average starting salary for graduates has dropped 10 percent, adjusted for inflation. Student debts can’t be cancelled in bankruptcy. A default brings penalties and ruins a credit rating.

To make matters worse, the job market for new graduates remains lousy. Which is why record numbers are still living at home.

Reformers and revolutionaries don’t look forward to living with mom and dad or worrying about credit ratings and job recommendations.

Third and finally, the American public has become so cynical about government that many no longer think reform is possible.

When asked if they believe government will do the right thing most of the time, fewer than 20 percent of Americans agree. Fifty years ago, when that question was first asked on standard surveys, more than 75 percent agreed.

It’s hard to get people worked up to change society or even to change a few laws when they don’t believe government can possibly work.

You’d have to believe in a giant conspiracy to think this was all the doing of the forces in America most resistant to positive social change.

It’s possible. of course, that they intentionally cut jobs and wages so much as to cow average workers, buried students under so much debt they’d never take to the streets, and made most Americans so cynical about government they wouldn’t even try to for change.

But it’s more likely they merely allowed all this to unfold, like a giant wet blanket over the outrage and indignation most Americans feel but don’t express.

Change is coming anyway. We cannot abide an ever-greater share of the nation’s income and wealth going to the top while median household incomes continue too drop, one out of five of our children living in dire poverty, and big money taking over our democracy.

At some point, working people, students, and the broad public will have had enough. They will reclaim our economy and our democracy. This has been the central lesson of American history.

Reform is less risky than revolution, but the longer we wait the more likely it will be the latter.

A Bigger, Better Supreme Court: The Case for Reform

Thursday, June 28, 2012 by The Guardian/UK

A string of key decisions decided by 5-4 split effectively makes it a 'court of one'. It's time to debate a less dysfunctional future

by Jonathan Turley

 

This week, the country awaits the blockbuster ruling of the supreme court on the future of national healthcare in the United States. Citizens have waited anxiously every Monday morning for weeks for the next pronouncement – whether on immigration, free speech or, now, healthcare – to be handed down from the highest court. It has left many uneasy about the hold that such a small number of unelected jurists have on the nation.

Chief Justice John Roberts (centre, front row) poses with fellow justices,
(from left) Anthony Kennedy, John Paul Stevens, Antonin Scalia, Clarence Thomas;
(back row) Samuel Alito, Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor.
(Photograph: Mandel Ngan/AFP/Getty Images)

Once again, many important decisions were the result of a court of one – 5-4 decisions, with "swing Justice" Anthony Kennedy deciding the issue for the nation. Healthcare is just one of a litany of cases that are reshaping the country in an image dictated often by just five members of the court. This has included sweeping changes in the political process from the Bush v Gore decision in 2000 (where the supreme court effectively chose the next president), to the Citizen's United case (where the court struck down campaign finance limits for corporations).

Also expected on Thursday is the decision in a free speech case, which many civil libertarians fear could deliver a huge blow to free speech in the United States. It is also expected to be a close vote.

While I support national healthcare, I have long opposed Obamacare on federalism grounds – denying states their constitutionally protected authority over such matters. Most experts are now predicting that the conservatives will likely carry the day in striking down critical parts of the law, or the law in its entirety. Despite being on the expected winning side of that particular case, I still believe that it is wrong for such a small group of jurists to make the decision for the country as a whole. In my view, the supreme court is demonstrably and dangerously too small.

Over ten years ago, I proposed a reform of the supreme court that would expand it to 19 members. A review of high courts around the world shows that most large nations have larger courts that avoid the concentration of power in the hands of so few jurists: Germany has 16, Japan 15, the United Kingdom 12, India 31, and Israel 15. Some use far greater numbers of justices who are divided among different divisions, like the 74 jurists in the Spanish high court or the 124 judges and deputy judges in France.

Again, while these systems have important structural differences, they do not have the concentration of power that characterizes the US supreme court. Canada does have a court that is the same size as the US supreme court, but the court has a mandatory retirement age of 75 that guarantees a higher turn over rate.

In drafting the US Constitution, the framers relied heavily on historical and contemporary models in other countries. So, today, a review of the function of larger courts around the world offers a better model for the modern court. The larger size of these courts does not produce administrative problems, while they allow greater diversity in experience and viewpoints.

The constitution itself does not specify the number of justices, and that number has actually fluctuated through the years. The nine-member court is a product not of some profound debate or study, but of pure happenstance. In fact, when the court first convened in 1790 in New York, at the Royal Exchange Building, it had six members. After that time, the size of the court expanded and shrank – largely with the number of federal circuits. Since justices once "rode circuit" and actually sat as judges in lower courts, Congress would add a justice when it added a circuit – or reduce the court with the elimination of a circuit. Thus, when a 10th circuit was added in 1863, a 10th justice was added at the same time. In 1869, the court happened to have nine members for the nine circuits. That is how we ended up with this size of a court.

Ever since the supreme court rested at nine members, we have repeatedly had problems of 5-4 splits, with one or two swing justices dictating the outcome of cases. With the increasing longevity of justices, such divisions have become stagnant and bitter. We often find ourselves captive to the idiosyncratic views of a couple of justices' views on privacy, or federalism, or free speech.

A national poll this month showed the public overwhelmingly opposed to how the court functions. Only 44% of citizens approved of how the court operates and 60% believe that "appointing supreme court justices for life is a bad thing because it gives them too much power."

The current controversy could not come at a more symbolic moment. This year is the 75th anniversary of the famous "court packing" effort of Franklin Delano Roosevelt. As today, the country in 1937 was in the midst of a profound economic crisis, and Roosevelt was saddled with four conservative justices – known as "the Four Horsemen" – who opposed his New Deal legislation. Roosevelt decided to introduce a bill to allow him to appoint up to six additional justices on the court. The crisis was averted when Roberts voted to support a critical New Deal case and "Horseman" Justice Willis Van Devanter retired – the famous "switch in time that saved nine" moment for the court. Roosevelt, though, may have had the right idea, for the wrong reason.

We can certainly debate the optimal number for the court, but we should finally have that debate after over 200 years. I believe a 19-member court would be ideal – roughly the average size of a circuit court. Appellate circuits are often divided between liberal and conservative judges. Yet, it is rare that one or two of those judges are consistently the swing votes on all issues when they sit "en banc" (or as a whole).

While appellate courts generally sit in three-judge panels, they sit as an en banc court in cases of great significance – the highest level of appeal short of the supreme court itself. In such cases, they function well as a whole and show greater diversity of opinion and experience. More importantly, the power of the judges themselves is diluted by the number. Experience has shown that a 19-member court is small enough to be manageable and would not present a significant burden in terms of confirmations.

Just because we settled on nine arbitrarily does not mean that any number is as good as any other. It is not enough to simply retort "why not 29 or 99?" One could just as easily ask "why not three or six?" The point is that we trying to decide on the best size for the court and should be able to look at other models objectively.

Both the recent polls and proposed reforms reflect a common concern that nine people should not wield such concentrated and sclerotic power. Even if we were to accept an elite court of just nine, these would not be the nine justices that most legal experts would choose. While clearly intelligent people, most justices are selected for their confirmability – a process that tends to favor formula nominees with a narrow range of experience and a short paper trail. The irony is that, because there are so few positions, confirmation fights have become increasingly bitter, so presidents have become increasingly risk-adverse. The result is that nominees are selected because they have never said or written anything remotely provocative – or even interesting. The chances that we could have again a Louis Brandeis or Joseph Story on the supreme court in the current system would be, at best, accidental.

If Congress ordered the proposed expansion, we'd get to a bench of 19 gradually, with no president allowed to appoint more than two new justices in a term. Once fully staffed, the court would have a more regular turnover. This would allow a broader range of diversity and more consistent opportunity for each president to add members to the court.

The expansion of the court might also allow Congress to force justices to return to the worthwhile practice of sitting on lower courts for periods of time. One of the greatest complaints heard from lawyers and judges alike is that justices are out-of-touch with the reality of legal practice and judging. A 19-member court would allow two members to sit on an appellate court each year by designation – and so actually be forced to apply the rulings that the court sends down to lower courts. Every five years, justices would be expected to sit as trial or appellate judges. The remaining 17 justices would sit each year to rule on cases.

Our experience with larger courts, both domestically and internationally, suggests that there is a better model for our highest court. Our respect for the court as an institution should not blind us to its flaws. It is time to reform – and expand – the US supreme court.

Rejecting the Lesser-of-Two-Evils Trap

A Voter's Manifesto
By RICHARD ANDERSON-CONNOLLY

Our climate of anger, disgust, and helplessness has produced three quite different exhortations regarding the election in November. All are understandable yet ultimately inadequate because they fail to recognize that the current economic disaster is nothing but the logical culmination of a political sickness rooted in the two-party system itself. If the objective is to prevent corporate rule then the most reasonable strategy in November is to cast a vote for a multiparty democracy. Other approaches merely tinker with the imminent expiry of what remains of American Democracy.

The most dynamic manifestation of the current turmoil is the so-called Tea Party, not really a party but simply the rightest wing of the GOP. With a few victories in the primaries this would have been a remarkably successful challenge to establishment incumbents were the Tea Party itself not fomented by the establishment. The saddest aspect is the participation of the economically insecure and downwardly mobile, unable to comprehend the causes of the crisis, promoting an agenda that can only worsen their position.

The left is split. Among one segment, particularly the Democratic center-left but including such solid comrades as The Nation's Katrina vanden Heuvel, the lesser-of-two-evils argument is proclaimed with almost hysterical vigor, drawing renewed strength from the rightward lurch of the Republicans.

Another big chunk of the left, along with many in the middle and the right and the obliquely outside, will simply not vote, voicing either an explicit disappointment in the broken promise of change or a muted recognition of a lack of efficacy.

All these reactions have some measure of truth – Throw the bums out! Don't let the nutjobs seize control! Nothing changes so why bother? – yet all fail to acknowledge the preeminent truth out our time: the all but monotonic movement over the last 40 years toward elite rule by means of corporations hindered only by the merest trappings of democratic governance.

One term for this is corporatocracy, a 21st century neologism which seems to not differ much from either plutocracy or oligarchy but might differ from fascism, a 20th century neologism, in that it may not be quite as violently repressive. It seems unlikely, however, that corporate rule, once the legitimacy held only by democracies is lost, could maintain its high levels of inequality without extreme violence. But whether we use the f-word or the c-word or some other term it would be hard to deny the assertion that we have moved, and continue to move, toward a system where an elite dominate virtually all spheres of political and economic life.

What is the evidence for this extreme diagnosis? We must, of course, start with the economy. The statistics are grim and undeniable. The mean income of the richest 20% increased by $60,000 in real terms from 1974 to 2009. The mean income of the poorest increased by $600 over that same period. The bottom 40% of the population have essentially no net worth; the top 10% own over 70% of the country's wealth; the top 20% have 85%. The official poverty rate is over 14%; if proper adjustments for the cost of living had been used it could easily be twice that amount.

It is important that the current economic crisis not be seen merely as the trough of a business cycle, even that of a particularly bad one. The recession was the culmination of forty years of increasing inequality and the resulting stagnation of the purchasing power of the middle and working classes. The upswing was artificially extended and the collapse exacerbated in large part by a transfer of money from the rich to the poor via debt: a movement from those who consume a smaller share to those who consume a larger share of their income. Now the tide has changed direction: the repayment of debt means a transfer from those on the bottom to those on the top. Consumer demand and growth will necessarily stagnate. Inequality and unemployment are linked.

The very same forces that undermined the middle class and delivered tens of millions of household to food stamps have strengthened the economic elite. In part, wealth was redistributed upward through corporate welfare, with warfare as one of the most effective means. Even more importantly downward redistribution is a pittance: the highest marginal tax rates are far too low and the rates on capital gains are unconscionable; there are no family allowances here as in Europe; health insurance is private and poorly regulated; college tuition is poorly subsidized. The weakness of unions, built into our labor law, keeps downward pressure on wages and allows profits to capture a bigger share of the pie.

One does not need to be a card-carrying Marxist to recognize the material basis of the crisis. In Germany from 1928-1936 the share of income going to the richest 5% of the population increased by 15%. In the United States from 1980-2009 the increase was 32%. There was a 19% increase during the dot-com decade, 1990-2000. The peak was in 2001 when the richest twentieth took 22.4% of all income; the richest have fallen back slightly to 21.7% in the wake of the financial crisis. By the way, the share of the richest twentieth in Germany in 1936 was 23%. We're almost there.

In any case the cultural and political superstructure has moved pari passu with the economy. We see a Christianity led by a sword-wielding savior. According to a 2008 Gallup poll 44% of Americans believed that God created man in his present form – the same percentage as in 1982; another 36% believed God had a guiding hand in the process. Casual racism against Arabs or Mexican immigrants is mainstream. Gays still can't marry and Fox News leads in ratings. The culture stagnates along with wages.

The state, as the Tea Party correctly recognizes, is far too strong yet in reality that power has been used on behalf of the oligarchy. Corporations, it seems, are persons and money equals speech. The state is in the business of extra-judicial kidnapping and assassination. Spying, ostensibly designed to catch the next would-be Saudi bomber, in reality targets environmentalists, anti-globalization protestors, and left-wing activists in general. The U.S. leads the world in both the total number of prisoners and the rate of incarceration, edging out Russia, our former superpower rival.

What policies might reverse course? Marginal taxes on the richest ought to be doubled, more or less. Same holds for the minimum wage, which today is lower in real terms than in the 1960s and '70s. Existing labor law – particularly the repressive Taft-Hartley Act – must largely be scrapped and replaced with labor-friendly work councils and codetermination. Anti-trust must make a vigorous comeback, starting with the four giant financial institutions, still operating under the same disastrous incentives that come with too-big-to-fail. Trade agreements that favor capital over labor must be voided or entirely re-written. Healthcare should become Medicare for all. The states need to commit to covering most of the costs at their universities and colleges instead of hitting struggling students with tuition to be paid back with interest.

To be successful it would take a massive redistribution of resources from the wealthiest and most powerful to the poorest and least powerful. It would be a dismantling of the Military-Industrial-Financial-Prison-Security-Congressional complex. Who would do this? Would the Praetorian Guard in the Pentagon and National Security Establishment permit it? Who even talks of such things?

Certainly not the Tea Party.

And not the Democrats.

The most successful Democrat over the last 40 years, Bill Clinton, can't be far to the left of Richard Nixon. Clinton, recall, gave us “Welfare Reform,” NAFTA, the Telecommunications Act, expanded government wiretapping, a capital gains tax cut, Alan Greenspan (reappointed), and deregulation of the financial sector. Just as important were his nondecisions: he did almost nothing to strengthen labor or to defend the environment. Defenders of his presidency should ask, “Were corporations stronger or weaker at the end of his eight years?”

Obama's record to date suggests he is closer to Clinton than to FDR except for the similarities in the condition of the economy. Despite strong support from the electorate and supermajorities in Congress, Obama could pass a version of healthcare “reform” only with the backroom support of Big Pharma, providing a nice illustration of the relative balance of power between corporations and the demos. Similarly it was Wall Street, not homeowners, who received government largesse as a response to the housing crisis. Workers are still waiting on the modest reform embodied in the Employee Free Choice Act.

Obama was elected with a mandate for change. Large Democratic majorities controlled Congress. The economic crisis provided as much political cover as the party could ever need. This was the perfect moment to aggressively regulate corporations and transfer income and wealth from the rich to the working and middle classes. Instead the indifference and inefficacy of the Democrats put corporate control into the sharpest possible relief. How is it possible to look at the record of Obama and the 111th Congress and then assert that the Democrats support the average worker over the elite?

One argument in favor of voting Democratic cites the Supreme Court. Yet when the Republicans controlled the presidency, the Democrats in the Senate abetted the ascendance of the corporate representatives in black robes. Let us not forget that the five votes in favor of corporate personhood in Citizens United came from justices confirmed with votes by Democrats in the Senate. (Those five justices, by the way, are all Roman Catholic, suggesting, perhaps, that the American version of fascism will have more of an Apennine than Teutonic flavor). The Democratic response to the decision has been typically tepid: the occasional rhetorical condemnation more than offset by the absence of a real counterattack on corporate personhood.

Some Democrats speak about the plight of the middle class, and may even genuinely be sympathetic to the human suffering, but they are caught in a system where promoting the interests of corporations is the best way to promote their own immediate interests, i.e., reelection. Money from corporations and the economic elite overwhelm the contributions from labor.

According the Center for Responsive Politics on their wonderful site opensecrets.org the Democratic Party so far in the 2010 election cycle has received $3 million from labor. The party has received $31 million -yes, that's 10 times as much – from the sector identified as Fire, Insurance and Real Estate, more colloquially known as Wall Street. The Democrats have received $14 million from communications/electronics and $10 million from the health industry.

Those lower and middle class Americans who made $20 contributions to Obama's presidential run are now perhaps realizing that their investments were far too meager to earn any return, and maybe even feeling a bit silly for imagining it could have been otherwise. It now seems likely many will find a better use of their money in 2012, assuming they can still scrounge up a Jackson.

Is there any observer of the American political scene who would deny that the entire “political spectrum” has almost continually shifted rightward over the last four decades? But this was no impersonal act of nature, some law of increasing political entropy: the shift was the result of a conservative discourse employed by politicians in both parties. Among Democrats the corporate agenda normally gets packaged as “bi-partisanship,” which liberals happily take as a sign of their reasonableness. But it doesn't really matter whether a vote in favor of corporate rule was cast as a compromise – the effect on the distribution of power and resources is the same regardless of intent.

Let me be quite explicit, because critiques like these are often used to construct men of straw, that I believe the average Republican to be worse than the average Democrat on virtually every issue. The argument here is that even the lesser-of-two-evils is so bad that we need to radically alter our strategy. Moves within the same game are no longer sufficient; looking ahead merely a few steps we can see that American Democracy will be in checkmate. Voting for Democrats is a tactic that, at best, will delay the arrival of the corporatocracy.

While the lesser-of-two-evils argument is probably the most reasonable, none of the three reactions to the current crisis weakens the oligarchy. The Tea Party gives us Christ the Capitalist, defender of tax-free capital gains. Those who stay home send a message that is too ambiguous and uncoordinated to be properly received. To find a strategy for November, we must not weigh the pros and cons of these three distinct recommendations but look instead for a common cause. The root problem, in this diagnosis, is not merely the greed, cowardice, or corruption of particular incumbent Democrats and Republicans, nor even of both party organizations in toto, but rather the late-stage symptoms of a disease known as the two-party system.

The two-party system is not the result of any explicit preference by the citizenry. It has little to do with tradition or culture or party loyalty. Two parties emerge as a reasonable response to a particular arrangement: single-member districts with plurality voting. Most Americans are woefully ignorant of comparative politics and might regard this type of voting simply as voting when, in fact, it is mostly confined to parts of the English-speaking world (probably another reason for American ignorance of the alternatives).

The empirical pattern between the type of voting system and the number of viable parties is so clear that it is known as Duverger's Law, named after the French sociologist who discovered it. What Duverger found, and what has been repeatedly confirmed, are two empirical facts:

(1) single-member district plurality voting, as in the United States, tends to produce only two viable parties and

(2) proportional representation and runoff voting tend to produce multiparty systems.

While it's possible to find a counterexample, this one factor – the voting system – explains more of the variation in the number of viable parties than any other. The logic is simple: under a single-member district plurality system vote-splitting among those who are ideologically similar could give the victory to the least preferred candidate. It make sense for ideological blocs to congeal around only two parties to prevent this dysfunction. And once established the forces of tradition and inertia can certainly strengthen the rational basis.

Put most simply I assert the following argument: for various historical reasons that today we can simply take as given, labor has been weak relative to business in the U.S. We also inherited plurality voting, with its problem of vote-splitting, creating our two-party system. Both parties became captured by the stronger economic elite. The politicians in the two parties created a political-economic system that strengthened the initial advantage of the economic elite. The ever-wealthier elite strengthened their control over both parties.

The simplicity of this stylized account doesn't matter much if we are now stuck in that last causal loop:

(1) the economic elite control the politicians in both parties; 

(2) The politicians pass laws that maintain or expand the economic power of the plutocrats.

If indeed the two-party system is the central problem then it follows that a multiparty democracy is the only solution. Duverger's law again applies. Proportional representation is the most important factor in producing more than two viable parties.

Imagine what would happen in November if we had proportional representation. New parties on the left, right, and center would spring into existence – tradition be damned! Both the Democrats and the Republicans would get the thrashing they deserve. There would be no talk of the enthusiasm gap. Yes, the Tea Partiers would pick up 15% of the vote and therefore earn about that many seats in Congress, but Greens, Progressives, Social Democrats, Socialists, and other parties of the left would collectively do even better.

A party or coalition that spoke to the insecurities of the middle class without the (tea) baggage of Christian fundamentalism, xenophobia, and homophobia would carry the day. The cross-national data indicate that countries with proportional representation have higher levels of equality and have resisted the trend toward inequality followed by the U.S. and the U.K. over the last 40 years.

Many of those on the left, while able to acknowledge the failings of both the Democrats and the two-party system as well as the rise in inequality, at this point generally respond with some type of pooh-pooh. Isn't proportional representation unconstitutional? Or, nice idea, but it won't work because we don't have a parliament.

Neither these nor any other fundamental objection exists. The House of Representatives could easily move to version of proportional representation simply by repealing a 1967 law that mandates single-member districts. House delegations from each state could be elected at large. Or large states like California could be broken into two, three, or four multi-member districts. (The Senate, on the other hand, is essentially our House of Lords and should be similarly debilitated or abolished outright.)

It is of secondary importance for the number of viable parties whether elected officials work under a parliamentary system or something like the U.S. Congress. If no party received a majority then several parties would simply caucus together.

Instant runoff voting would be even easier because it does not require a switch to multi-member districts but simply the ranking of candidates on the ballot – a good start although it would likely not produce as many viable parties as proportional representation.

So where do we stand? The country is suffering from corporate dominance. The cause of the disease is plurality voting and the two-party system. If we continue on this course the prognosis is full-blown corporatocracy or fascism. The cure is the greater political and economic equality that follow from a multiparty democracy. This can be realized only by adopting proportional representation.

What is to be done? Although I fear that nothing can prevent our ultimate decline into fascism, that it might be time to consider a strategy to rebuild a democracy after a collapse, I suggest that a reasonable counterattack for November is to link the push for a multiparty democracy with a publicized decision-rule: Vote for candidates who commit to voting reform, particularly proportional representation but also instant runoff voting and public financing of campaigns.

That's it. Party affiliation should be irrelevant, unless more than one candidate in the race supports voting reform. If no candidate supports voting reform then don't vote but, importantly, make it known to the candidates that you didn't support them for that reason.

This can easily be done via email. For example, I have contacted the candidates running for federal office in my state and district, inquiring of their views on proportional representation, instant runoff voting, and public financing. So far, no response. On election day I will follow-up to explain why I didn't support them.

This decision rule includes the three responses – the Tea Party, the lesser-of-two-evils, and abstention – as particular cases: I would vote for a tea-partying Republican who supported proportional representation; voting for a Democrat who promoted voting reforms would be entirely palatable; and I will be forced to abstain if no worthy candidate is in the race.

It would also include as a fourth case, one largely ignored in the current campaign season, a vote for a genuine “third” party or independent. Both the Libertarians and Greens are good on voting reform. (Yet Ralph Nader, surprisingly, does not seem to understand the importance of this issue or perhaps prefers the role of spoiler as some have suggested.)

How might this voting rule be defended to a hysterical Democrat? If indeed Democrats are the lesser-of-two-evils then appeals for procedural fairness, that is, a more representative democracy, should be seen as a reasonable demand. On the other hand, if the Democrats are not more committed than Republicans to a fair voting system, the sine qua non of democracy, then the rest of us don't need to take their moral posturing very seriously.

Even so, to sweeten the deal for the Democrats I would offer an secondary decision rule: If both a Democrat and a third-party candidate support voting reform, then vote for the Democrat. This undermines the spoiler charge; the responsibility for vote-splitting now rests with the Democrats.

Nonetheless my central message is that we must reject the trap of the lesser-of-two-evils. Democrats are moving us toward corporate rule just as surely as the Republicans. If two cars are both driving toward a collapsed bridge one should hardly be excited about getting inside the vehicle that is traveling more slowly. Democrats who refuse to see the magnitude of the oncoming crisis, or who see it but do nothing to reverse course, have no moral claim to our votes.


We can make sense of our times only be recognizing that the root of our problem is a two-party system that has been completely captured by the economic elite. The solution will not be found by picking the best choice among the available options but rather by transforming the system into a genuine multiparty democracy. Therefore a vote in November for candidates who support voting reform is the most reasonable strategy for preventing corporate rule and for renewing our democracy.

Democratic ‘budget hawks’ champion expensive tax cuts for wealthy

(There is nothing "fiscally sound" about cutting Medicaid, Medicare, and Social Security in order to finance a $70 billion per year hit to the deficit so that the richest get even richer.--jef)


By Sahil Kapur - Tuesday, September 21st, 2010

With Congress poised for a showdown over the Bush tax cuts, 24 members of the Blue Dog Coalition – a group of House Democrats who tout "fiscal responsibility" as their core belief – are championing the extension of $70-billion-per-year tax cuts for the highest income-earners.

The Democrats voiced their positions in a letter to House Speaker Nancy Pelosi (D-CA) and Majority Leader Steny Hoyer (D-MD), both of whom – along with President Barack Obama – support allowing the high-end Bush tax cuts expire as scheduled at the end of this year.

"We believe in times of economic recovery it makes good sense to maintain things as they are in the short term," they wrote. (Ha!-jef)

Thirty-one House Democrats signed the letter – their names were first reported by Christina Bellantoni of Talking Points Memo. All but seven are Blue Dogs, Raw Story has learned.

"Today, our underlying structural deficits represent the biggest threat to our economic security," reads the front page of the 54-member coalition's Web site, which describes its members as "independent voices for fiscal responsibility and accountability."

The Web site also includes a ticker on the national debt, a section called "Budget Reform," and a number of press releases about coalition members supporting fiscally responsible measures.

But this stance suggests that despite claiming to be fiscal hawks, deficit reduction for many Blue Dogs takes a back seat to providing tax breaks for rich Americans.

A spokeswoman for the Blue Dog Coalition did not respond to a request for comment.

This is strong agreement between Democrats and Republicans on continuing the tax cuts for individuals earning less than $200,000 per year and families earning less than $250,000 – those making more are set to have their taxes return to Bill Clinton-era levels unless Republicans and dissenting Democrats get their way.

Under Obama’s proposal, individual income above $200,000 would be taxed at 39.6 percent rather than 36 percent come January – even the wealthy would continue to pay the same lower rate for their earnings below that figure.

Sens. Kent Conrad (D-ND), Ben Nelson (D-NE), Evan Bayh (D-IN) and Joe Lieberman (I-CT) have joined Republicans and the 31 House Democrats in opposing the expiration of the Bush tax cuts for top earners.

Republicans, who have relentlessly criticized Democrats as reckless spendthrifts, are threatening to block tax extensions for the middle class if high-end tax cuts aren’t also in the mix. They have floated temporary extensions of the top-bracket rates, but skeptics claim their real intention is to codify them permanently.

The nonpartisan Congressional Budget Office estimates that extending the cuts on the top marginal tax rate would only affect 2 to 3 percent of small businesses and would have a minor overall impact in spurring economic growth, while dramatically increasing the deficit.

Below is the list of the 24 Blue Dogs, as compiled by Raw Story, who oppose letting the high-end Bush tax cuts expire.

Rep. Allen Boyd (FL)
Rep. Jim Costa (CA)
Rep. Jim Matheson (UT)
Rep. Glenn Nye (VA)
Rep. Lincoln Davis (TN)
Rep. Brad Ellsworth (IN)
Rep. Dan Boren (IN)
Rep. Mike McIntyre (NC)
Rep. John Barrow (GA)
Rep. Zack Space (OH)
Rep. Jason Altmire (PA)
Rep. Jim Cooper (TN)
Rep. Joe Donnelly (IN)
Rep. John Salazar (CO)
Rep. Frank Kratovil (MD)
Rep. Earl Pomeroy (ND)
Rep. Jim Marshall (GA)
Rep. Stephanie Herseth-Sandlin (SD)
Rep. Sanford Bishop (GA)
Rep. Mike Ross (AR)
Rep. Travis Childers (MS)
Rep. Walt Minnick (ID)
Rep. Harry Mitchell (AZ)

Tim Geithner Opposes Nominating Elizabeth Warren To Lead New Consumer Agency

(Warren=Good;  Geithner=Douchebag...--jef)

***

Shahien Nasiripour | 07-15-10

Treasury Secretary Timothy Geithner has expressed opposition to the possible nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau, according to a source with knowledge of Geithner's views.

The financial reform bill passed by the Senate on Thursday mandates the creation of a new federal entity charged with protecting consumers from predatory lenders.

But if Geithner has his way, the most prominent advocate for creating the agency may not be picked to lead it.

Warren, a professor at Harvard Law School whose 2007 journal article advocating the creation of such an agency inspired policymakers to enact it into law, has rocketed to prominence since the onset of the financial crisis as one of the leading reform advocates fighting on behalf of American taxpayers.

Warren has been an aggressive proponent for the bureau in public and behind the scenes, working regularly with President Barack Obama's top advisers and the Democratic leadership in Congress. Since 2008, she has overseen the Congressional Oversight Panel, a bailout watchdog created to keep tabs on how two administrations spent hundreds of billions of taxpayer dollars to bail out Wall Street while struggling to keep distressed homeowners out of foreclosure and small businesses from collapsing.

Yet while her work on behalf of a federal unit designed solely to protect borrowers from abusive lenders has been embraced by the administration, Warren's role as a bailout watchdog led to strained relations with the agency her panel has taken to task with brutal reports every month since Obama took office: Geithner's Treasury Department.

It's no secret the watchdog and the Treasury Secretary have had a tenuous relationship. Geithner's critics have enjoyed watching Warren question him during his four appearances before her panel. Her tough, probing questions on the Wall Street bailout and his role in it -- often delivered with a smile -- are featured on YouTube. One video is headlined "Elizabeth Warren Makes Timmy Geithner Squirm."

While her grilling of Geithner in September, over what members of Congress have called the "backdoor bailout" of Wall Street through AIG, inspired the "squirm" video, just last month Warren pressed Geithner on the administration's lackluster foreclosure-prevention plan, Making Home Affordable. Criticizing him for Treasury's failure to keep families in their homes, she questioned Treasury's commitment to homeowners.

Warren's persistent oversight is part of the reason for Geithner's opposition, according to the source.

In addition, her increasing public profile could make it difficult for Geithner, who will oversee the unit until it's transferred to the Federal Reserve. His role would involve trying to balance her advocacy on behalf of borrowers with the demands of the nation's major financial institutions, his traditional constituency.

Geithner's objections to Warren taking over that role also involve her views on Wall Street, sources say. The longtime professor believes the nation's megabanks are Too Big To Fail and have been among the biggest abusive lenders in the country. Her toughness on giant banks is said to be a longtime source of tension with Geithner.

Obama's top economic adviser, Lawrence Summers, is also said to have a strained relationship with Warren, though his stance on her nomination is not known.

Democrats in Congress have been among her most enthusiastic supporters. House Financial Services Chairman Barney Frank is one of many influential members who hope she'll get the nod.

And while labor and consumer groups often butted heads with Geithner on various aspects of the financial reform legislation, they have lauded his support for strong consumer protections. Warren, however, has been referred to as a "rock star" among consumer advocates. Many have told HuffPost they're hoping Obama picks her to head the new bureau.

Geithner's opposition could have political implications for a White House determined to prove it's gotten tough on Wall Street. Since March, Obama has devoted four of his weekly Saturday addresses to highlight and promote the consumer agency.

In March 2009, in response to a question during a town hall event in Southern California about the bailout for Wall Street firms and whether Obama supported tougher consumer protections on credit cards, Obama promoted Warren's academic work:

"The truth of the matter is that the banking industry has used credit cards and pushed credit cards on consumers in ways that have been very damaging," Obama said according to a transcript. "There's a woman named Elizabeth Warren who's a professor at Harvard who did a great deal of study around this. And she made a simple point. You know, if you bought a toaster, and the toaster blew up in your face, there would be a law, a consumer safety law, that would protect you from buying that toaster. But if you get a credit card that blows up in your face, that starts off at zero-percent interest, and once they kind of suck in the -- buying a bunch of stuff and suddenly it's 29 percent; and if you're late two days, suddenly, you know, you just paid another $30, and all kinds of fine print that a lot of folks didn't understand -- well, somehow that's okay.

"I think generally having some consumer safety, some consumer protection around credit cards, is important," Obama added.

Three months later, the administration released its blueprint for how it wanted to fix the nation's broken financial system. Warren's idea for a consumer agency was a heavily-promoted part of it.

Warren, a Treasury Department spokesman and a White House spokesperson all declined to comment for this article.

Congress and the Oil Spill

Hot Rhetoric, Hollow Reform
By JAMES RIDGEWAY

The way the Washington Post reported the story, Congress has finally pushed through “tougher” off-shore drilling regulations for oil companies.

Two key Senate committees approved legislation before the July 4 holiday that purport to change the way the federal government regulates offshore oil drilling and that penalize companies for oil spills. Both measures passed on bipartisan voice votes. One approved by the Energy and Natural Resources Committee would raise the civil and criminal penalties for a spill, require more safety equipment redundancies, boost the number of federal safety inspectors and demand additional precautions for deep-water drilling. The other, passed by the Environment and Public Works Committee, would remove a $75 million limit on oil company liability and would retroactively remove the liability cap for BP and the Deepwater Horizon explosion.

The Post article stated that these measures ”demonstrat[e] lawmakers’ eagerness to respond to the disaster in the Gulf of Mexico.” The writer ought to have more accurately said that the measures demonstrate lawmakers eagerness to look like they are responding to the disaster. In the real world, the proposed measures will serve mostly as election-year greenwashing, with little genuine impact.

Just about everyone at this point knows that liability awards will be determined not in the hallowed halls of Congress, but by knock-down, drag-out court fights. More safety precautions can gradually be rolled back or ignored, just as earlier safety regulations were rolled back or ignored in the years leading up to the BP spill. And none of this goes to the basic dilemma of whether drilling at these depths should be allowed at all, when the dangers are so great and the stakes so high. Members of Congress can see the heat the White House has gotten for daring (in an uncharacteristic move) to impose even a partial moratorium on deepwater drilling: a federal judge declared the move illegal, while right-wingers attacked it as something just short of a Communistic plot to destroy the nation’s economy.

As long as Congress tinkers around the edges of the issue, its members can avoid the explosive core. As a character in a famous Italian political novel once said, “If we want everything to stay the same, everything must change.”

Let’s talk about the overriding fact that no one, apparently, sees fit to mention: The great bulk of our domestic oil lies in public domain territory along the outer-continental shelf of the United States. Since it is already owned by the public, and is supposed to be held in trust for our well-being, the threat of “nationalizing” oil is simply a strawman. Oil is already nationalized in the United States–it is owned by the nation, and by the people. But we have basically turned over this huge asset to the energy industry, especially the oil and gas companies. This has been done through a huge system of undervalued, under-regulated leases that give companies a free hand to exploit the wealth of the public domain at almost no cost. The government has placed the disposition and oversight of this valuable resource in the hands of the Interior Department, which has a long history of connivance with the extractive industries.

In sum, we citizens of the United States have surrendered the greatest natural resource wealth of our nation to private business interests–who naturally run it for their own profit, rather than for the public good. In return, we have demanded virtually nothing. And the little we have demanded–the most basic of safety precautions, the most modest of demands for fair pricing–have been ignored and derided by companies that regularly top the Global 500 list for profitability.

Keep in mind that these are not the mythological “Main Street” American business interests, the scrappy entrepreneurial spirits so beloved by conservatives and libertarians alike. These are not hundreds and thousands of little companies duking it out in the free market. They’re a few big multinational companies, whose death grip on the world’s energy resources dates back a hundred years or more. They operate in secret through cartels to determine how these resources are parceled out, priced, and used.

One of many obstacles to any real change in this system is the absence of transparency and reliable information. For example, the oil companies, not the government, have been tasked with mapping oil and gas reserves on the public domain. This prevents any real public scrutiny, and any impartial scientific judgement on how to administer the public trust. It also serves to obscure from view the massive ripoff that constitutes the leasing system. Historically, disagreements over this system—over whether reserves are over- or under-estimated, details of environmental impacts, disputes over fair costs–all have come down to information or the lack of information.

In the last energy crisis in the 1970s, I wrote a book called New Energy together with Bettina Conner, a colleague at the Institute for Policy Studies. At that time, there was a move in Congress to make knowledge of oil reserves transparent. My book includes an excerpt from the Joint Economic Committee of the Congress in its investigation of the energy crisis in 1974. That report said:

The lack of accurate,well-analyzed data regarding energy sources and uses has placed the United States government in a ludicrous position.When those officials directly charged with administering energy policy are unable to determine accurately the extent of the present fuel shortage or to estimate reliably its potential impact on the economy. Nor can they determine fuel production costs with anything approaching the degree of accuracy necessary to administer the price control program.The government knows almost nothing about the extent of the vast mineral fuel resources contained in public lands. Tax policy formulation is hampered by the lack of analysis of existing special tax provisos for mineral fuel extraction and consequent ignorance of their impact.

William Simon, Nixon’s administrator of the Federal Energy Office, acknowledged the situation before the joint economic committee in January 1974 when he declared, “Let me say right at the outset that there has never been in existence an adequate energy data system…Today and in the years ahead we need better data on everything from reserves to refinery operations to inventories…Data we can check, verify, and cross check.’’

Despite all the study and debate, the Congress has never done anything to remedy the situation. The late Wisconsin Democratic senator Gaylord Nelson introduced legislation to create independent public libraries of basic information. Under his bill, failure to make public such details would make officials liable to prison sentences and fines. The legislation was bottled up in committee and died a silent death at the hands of powerful energy interests in Congress.

Then there was a move to establish a Federal Energy Corporation to conduct research on alternative energy and new uses of fossil fuels. This Federal Energy Corporation would have been empowered to gather and decipher data on oil and gas holdings, and even produce a limited amount of oil and gas itself, for our strategic reserve. The government would control no more than 20 percent of total oil from public territories offered for leasing, and would be a supplier of last resort. In effect,it would act as a yardstick against which to measure the private petroleum industry. It would be a hedge against the unrestrained power of this industry, which periodically gouges the American public at the pump, even though the public owns the very oil and gas it is buying from these companies. Needless to say, that initiative, too, died a sudden, quiet death.

In the 1970s those measures may have failed; today they would never even be proposed. Set against the national debate that took place four decades ago, the current discussion in Congress and the proposed remedies, the passive stance of Obama and his administration, are extraordinary. It seems like our members of Congress don’t know recent American history–or, when it comes to the older members, even remember it. But they seem to know, by instinct, that adage from the Italian novel: “If we want everything to stay the same, everything must change.”

US Banks Off the Hook Until 2022

by Andrew Clark | June 29, 2010 by The Guardian/UK

It was billed by Barack Obama as the toughest crackdown on Wall Street since the great depression. But top US banks could be given until 2022 to comply with the so-called Volcker rule, which is supposed to restrict financial institutions' riskier trading activities.

A string of delays and extension periods written into a final version of Congress's financial regulation reform bill means that firms such as Citigroup and Goldman Sachs could exploit loopholes until 2022 before withdrawing from "illiquid" funds such as private equity. The long gestation period is an example of the degree of compromise inserted into the package following months of lobbying on Capitol Hill by powerful banks.

"You can't just say 'stop', you can't just say 'unwind,'" said Lawrence Kaplan, a lawyer at Paul, Hastings, Janofsky & Walker in Washington, who said the delay was a dose of political reality. "These things have contracts and detailed legal frameworks. You can't undo them without doing considerable harm."

The Volcker rule, championed by formed Federal Reserve boss Paul Volcker, stops banks from engaging in "proprietary trading" whereby they trade with their own capital, rather than clients' money. It also severely restricts their investments in high-risk hedge funds and private equity ventures.

Language in the act, according to Bloomberg News, allows for a six-month study and a further nine months of rule-making. The measure is supposed to become effective 12 months after the final rule is laid, then banks have two years to conform. But if they need to, they can apply for a three-year extension. On top of that, a five-year moratorium is available for "illiquid" funds that are hard to unwind.

Complicated caveats in the bill are subject to interpretation. A spokesman for Jeff Merkley, a Democrat who proposed various changes to the rule, told Bloomberg that the maximum delay was supposed to be nine years.

Other measures in Obama's reforms include the creation of a consumer protection agency, the introduction of a vote by shareholders' on boardroom pay and new powers for authorities to seize troubled financial institutions.

For Wall Street, the Volcker rule and curbs on derivatives trading are the most contentious changes. In a research note, analyst Jason Goldberg of Barclays Capital said JP Morgan, Bank of America and Citigroup would be most affected by a ban on proprietary trading. Taken together with the rest of the regulatory reform bill, Goldberg estimated that Obama's crackdown could cut earnings at 26 leading banks by 14% in 2013, eliminating nearly $18bn of profit.