The Koch Bros., ALEC and the Power of the State

"We Don't Have the Power to Coerce Anybody"...That's Why They Need Government
by KEVIN CARSON


Were there an awards show for unintentional howlers, Charles Koch’s statement in a Forbes interview last December (“Inside the Koch Empire: How the Brothers Plan to Reshape America,” December 5, 2012) would surely be a nominee. “Most power is power to coerce somebody,” he said. “We don’t have the power to coerce anybody.”

No, but the government sure does. Maybe that’s why the Koch Brothers put so much money into lobbying groups and think tanks like the American Legislative Exchange Council and the Heritage Foundation whose main purpose is to influence government policy.

“Oh,” but you say. “They’re not looking to make money through increased government coercion. Far from it! They’re just lobbying government to get out of the economy so they can take their chances competing on their merits in an unfettered market economy.”

Well … not quite.

Kevin Carson is a senior fellow of the Center for a Stateless Society (c4ss.org) and holds the Center’s Karl Hess Chair in Social Theory.

The legislative agenda pursued by groups like ALEC, Heritage, the American Enterprise Institute and the Heartland Institute isn’t exactly libertarian. At least not if, by “libertarian,” you mean anything more principled than “whatever big business wants from government to make it profitable.”

As an example, consider so-called “Ag-Gag” bills – written by ALEC — that prohibit undercover journalists from exposing animal abuse within corporate agribusiness. This past year such bills were introduced in nine states and signed into law in three.

The Koch Brothers are also enthusiastic advocates (to say the least) of the Keystone XL pipeline, standing to make billions from the project if it’s completed. Needless to say, Keystone’s route depends heavily on the use of eminent domain to steal land from family farmers, and Keystone’s government backers have run roughshod over Indian lands (including sacred burial grounds) guaranteed by treaty. Last I heard, eminent domain is only possible through coercion — you know, that thing David Koch said he lacks the ability to do.

The Keystone project is also heavily dependent on regulatory state preemption of ordinary common law standards of civil liability for the air and groundwater pollution and health damage fracking causes to surrounding communities. And the Koch brothers are also prominent cheerleaders for “tort reform” — i.e., making it more difficult to hold corporations liable for their wrongdoing and make them pay for the harm they’ve caused.

So the actual pattern we see is the Koch brothers and their pet think tanks actively encouraging a near-totalitarian level of state intervention to suppress all the mechanisms of civil society — investigative journalism by a free and independent press, a vigorous system of civil liability, etc. — that would help keep business honest and hold it accountable. Hardly surprising, when you consider Koch Industries got its start building oil refineries for Joseph Stalin. Say, now — he had the power to coerce, didn’t he?

While we’re at it, ALEC has actively lobbied for the draconian drug laws and for detention of “illegal aliens” [sic] that are so profitable to its sponsors like CCOA, Wackenhut and other private prison corporations. That doesn’t sound too libertarian, does it?

And how about David Addington’s new No. 3 role at Heritage? Addington was Dick Cheney’s go-to guy for writing legal memos on stuff like indefinite detention, torture, and warrantless surveillance. You can see why a guy like that would be a perfect fit for a think tank that’s all about “limited government” and “restoring the Constitution.” All sarcasm aside, I think you can see that people like this have a very, um, skewed idea of what “freedom” means.

The role of people like Charles and David Koch, and of think tanks like ALEC, AEI and Heritage, in the larger free market libertarian movement is a lot like that of the Pharisees in the Judaism of Jesus’s time. “Whited sepulchres” and “generation of vipers” are some of the terms he used, I think.

The Pharisees, Jesus said, would cavil and split hairs for years on the finer points of the law, while utterly disregarding its spirit; they would tithe their very herbs, while putting their money into their day’s equivalent of tax-free nonprofit foundations to avoid taking care of their aged parents.

The corporate Pharisees of our day strain at a gnat using “free market” rhetoric to attack welfare for the poor, but swallow a camel when it comes to welfare for corporations. They claim to favor “economic freedom” and “free trade,” while putting the entire world under the totalitarian lockdown of draconian “intellectual property” law to guarantee their enormous monopoly rents. They complain that “taxation is theft,” while their mining and agribusiness corporations act in collusion with governments to kick the peoples of world off their land.

It’s time to scourge the money-changers from the temple.

Justice Thomas Ruled on 3 Cases Where AEI Filed AFTER AEI Gave Him $15,000 (2 articles)

Clarence Thomas Decided Three Cases Where AEI Filed a Brief After AEI Gave Him a $15,000 Gift

Tuesday 21 June 2011

by: Ian Millhiser, ThinkProgress | Report 

In 2001, a conservative, corporate-aligned think tank called the American Enterprise Institute (AEI) gave Justice Clarence Thomas the gift of a $15,000 bust of Abraham Lincoln. At the ceremony presenting Thomas with this very expensive gift, AEI president Christopher DeMuth explained that the bust was “cast in 1914 by the great neo-classical sculptor Adolph Alexander Weinman.”

Watch it:

AEI, however, is not simply in the business of giving luxurious gifts to Supreme Court justices — it is also in the business of litigating before the United States Supreme Court. ThinkProgress uncovered three briefs that AEI filed in Thomas’ Court after Thomas received their $15,000 gift. Thomas recused from none of these three cases, and he either voted in favor of the result AEI favored or took a stance that was even further to the right in each case:

• Riley v. Kennedy: AEI filed a brief asking the Supreme Court to reverse a lower court decision preventing a change in Alabama’s voting law from going into effect. Justice Thomas did not recuse, and he joined the Supreme Court’s decision reversing the lower court.

• Parents Involved in Community Schools v. Seattle School District No. 1: AEI filed a brief asking the Supreme Court to reverse a lower court decisionupholding a local school district’s desegregation plan. Thomas joined the majority opinion reversing the lower court’s decision, and he filed a lengthy concurrence defending that result.

• Whitman v. American Trucking Association: AEI joined a brief asking the Supreme Court to allow the EPA to consider the costs of implementing new air quality standards before it issued them. Thomas’ concurring opinion went much further than AEI asked him to go, suggesting that the law authorizing EPA to issue these standards is unconstitutional.

Although there is no evidence that AEI gave Thomas the $15,000 gift specifically to buy his vote in a particular case, Thomas’ decision to sit on cases where his benefactor has a demonstrated interest creates a very serious appearance of impropriety. No one would trust a judge to hear their case if they learned that someone on the other side of the case had given that judge a rare and expensive gift.

++++++++++++

Justices Have Been Forced to Resign for Doing What Clarence Thomas Has Done

Monday 20 June 2011

by: Ian Millhiser, ThinkProgress | Report 

 

Justice Clarence Thomas is an ethics problem in a black robe. Just eight months after ThinkProgress broke the story of Thomas’ attendance at a Koch-sponsored political fundraiser, we learn that Thomas doesn’t just do unethical favors for wealthy right-wing donors — they also do expensive favors for him.

Leading conservative donor Harlan Crow, whose company often litigates in federal court, donated $500,000 to allow Thomas’s wife to start a Tea Party group and he once gave Thomas a $19,000 Bible that belonged to Frederick Douglass. The American Enterprise Institute, a conservative think tank which frequently files briefs in Thomas’ Court, also gave Thomas a $15,000 gift.

If this sounds familiar, it’s because America has seen this movie before. Indeed, the Thomas scandal is little more than a remake of the forty year-old gifting scandal that brought down Justice Abe Fortas. Like Thomas, Fortas liked to associate with wealthy individuals with potential business before his Court. And like Thomas, Fortas took inappropriate gifts from his wealthy benefactors.

Fortas’ questionable gifts first came out when President Johnson nominated him for a promotion to Chief Justice of the United States in 1968. Fortas had accepted $15,000 to lead seminars at American University — far more than the university normally paid for such services — and the payments were bankrolled by the leaders of frequent corporate litigants including the vice president of Phillip Morris. Fortas survived this revelation, although his nomination for the Chief Justiceship was filibustered into oblivion.

Just a year later, the country learned that Fortas took another highly questionable gift. In 1966, one year after Fortas joined the Court, stock speculator Louis E. Wolfson’s foundation began paying Fortas an annual retainer of $20,000 per year for consulting services. Fortas’ actions were legal, and he eventually returned the money after Wolfson was convicted of securities violations and recused himself from Wolfson’s case, but the damage to Fortas — and the potential harm to the Supreme Court’s reputation — were too great. Fortas resigned in disgrace.

It is difficult to distinguish Fortas’ scandal from Thomas’. Like Fortas, Thomas accepted several very valuable gifts from parties who are frequently interested in the outcome of federal court cases. One of Thomas’ benefactors has even filed briefs in his Court since giving Thomas a $15,000 gift, and Thomas has not recused himself from each of these cases.

Of course, Thomas is also the least likely Justice to actually follow the command of precedent. Thomas embraces a discredited theory of the Constitution which would return America to a time when federal child labor laws were considered unconstitutional. His fellow justices criticize him for showing “utter disregard for our precedent and Congress’ intent.” Even ultra-conservative Justice Antonin Scalia finds Thomas’ approach to the law too extreme — in Scalia’s words “I am a textualist. I am an originalist. I am not a nut.”

But Thomas’ disregard for what has come before him changes nothing about the precedent he faces. If Abe Fortas had to resign his seat, so too should Clarence Thomas.

Bernanke's Biggest Bailout

Toxic Transfer
By MIKE WHITNEY

The right-wing white paper mill, the American Enterprise Institute, is helping the Federal Reserve to develop a strategy to transfer $1.25 trillion in toxic mortgage-backed securities (MBS) and non performing loans onto the public's balance sheet. Although it's unknown whether Fed chair Ben Bernanke will act on the AEI's recommendations, it does show that the Fed's Quantitative Easing program (QE)--which moved the bulk of garbage assets from the banks to the Fed's balance sheet--poses long-term problems that will need to be addressed. Bernanke never intended to keep these assets any longer than necessary. Now he is actively exploring options for getting rid of them.

Ostensibly, the QE program was designed as the first leg in a two-step process to remove the bad paper from the banks balance sheets and then dump it on Fannie Mae and Freddie Mac as discreetly as possible. So far, Bernanke has been relatively successful in convincing people that he was buying the assets to increase lending, which was clearly never the objective. Quantitative Easing was a fraud from the get-go. Here's an excerpt from the AEI's web page by the eerily-named "Shadow Financial Regulatory Committee" which explains what's going on:

"Freddie and Fannie have been placed in conservatorship and the Treasury has confirmed that their debt is now guaranteed by the U.S. Government. This means that their debt is essentially identical to Treasury debt. The Treasury could simply issue Treasury debt to Freddie and Fannie with the offsetting accounting transaction being an IOU to the U.S. Treasury. Freddie and Fannie could then swap the acquired Treasury debt for MBS held by the Federal Reserve. This transaction would have several desirable features. It would place housing debt on the books of Freddie and Fannie where it belongs and remove the Fed from financing U.S. housing policy, which is appropriately a fiscal policy and not a monetary policy function. This would also help to re-establish Federal Reserve independence from the Treasury and fiscal policy. Finally, it would free the Fed to device strategies to reduce its balance sheet by engaging in more traditional asset sales in the much deeper Treasury market where the pricing impacts would be smaller and would accommodate a more rapid reduction in excess reserves." ("Mortgage Backed Securities in the Federal Reserve’s Portfolio" Shadow Statement No. 294, American Enterprise Institute)

So, there it is in black and white: the committee believes that the "transaction would have several desirable features. It would place housing debt on the books of Freddie and Fannie where it belongs and remove the Fed" from any further obligation. Naturally, the Fed will need an excuse to justify what-amounts-to another gigantic bailout. The AEI thinks that the fear of inflation will do the trick, and they are probably right. Expect the Fed to mobilize its allies in the media to launch a public relations campaign that focuses on the imminent threat of hyperinflation. That way--when Bernanke dumps more than a trillion dollars of toxic sludge into Uncle Sam's mortgage-recycling center--he'll only be performing his statutory duties to maintain price stability.

There's nothing fancy about the AEI's strategy; it's a pretty straightforward "no frills" ripoff. Bernanke buys the garbage from the banks and then transfers it to the GSE's. No muss, no fuss.

It's a shame that congress can't figure this stuff out. Bernanke is merely acting as one would expect. He's bent-over-backwards to save the banks from nationalization and to keep their political and financial power intact. He's also usurped congress's power over the purse-strings by initiating fiscal policy (in the purchasing of the toxic assets) which is well-beyond the Fed's mandate. Now he's putting the finishing touches on another giant bailout so he can clear the Fed's books and resume the arduous task of bubblemaking.

Is it really that hard for congress to figure out what's going on?