Whose Corporations? Our Corporations!

The idea that corporations are obligated only to shareholders is a dangerous fad. Law and precedent say they owe a strong duty to the 99%.

By Ken Jacobson, AlterNet
Posted on April 3, 2012

Corporations are not working for the 99 percent. But this wasn’t always the case. In a special five-part series, William Lazonick, professor at UMass, president of the Academic-Industry Research Network, and a leading expert on the business corporation, along with journalist Ken Jacobson and AlterNet’s Lynn Parramore, will examine the foundations, history and purpose of the corporation to answer this vital question: How can the public take control of the business corporation and make it work for the real economy?

Historically, corporations were understood to be responsible to a complex web of constituencies, including employees, communities, society at large, suppliers, and shareholders. But in the era of deregulation, the interests of shareholders began to trump all the others. How can we get corporations to recognize their responsibilities beyond this narrow focus? It begins in remembering that the philosophy of putting shareholder profits over all else is a matter of ideology which is not grounded in American law or tradition. In fact, it is no more than a dangerous fad.

The Myth of Profit Maximizing

“It is literally – literally – malfeasance for a corporation not to do everything it legally can to maximize its profits. That’s a corporation’s duty to its shareholders.”

Since this sentiment is so familiar, it may come as a surprise that it is factually incorrect: In reality, there is nothing in any U.S. statute, federal or state, that requires corporations to maximize their profits. More surprising still is that, in this instance, the untruth was not uttered as propaganda by a corporate lobbyist but presented as a fact of life by one of the leading lights of the Democratic Party’s progressive wing, Sen. Al Franken. Considering its source, Franken’s statement says less about the nature of a U.S. business corporation’s legal obligations – about which it simply misses the boat – than it does about the point to which laissez-faire ideology has wormed its way into the American mind.

The notion that the law imposes a duty to “maximize shareholder value” – a phrase capturing the notion that profits are mandatory and it is the shareholders who are entitled to them – is so readily accepted these days because it jibes perfectly with assumptions about economic life that constantly come down to us from business and political leaders, from academia, and from the preponderance of the media. It is unlikely to occur to anyone under the age of 40 to question this idea – or the idea that the highest, or even sole, purpose of a corporation is to make a profit – because they have rarely if ever been exposed to an alternative view. Those in middle age or beyond may have trouble remembering a time when the corporation’s focus on shareholders’ interests to the exclusion of all other constituencies –customers, employees, suppliers, creditors, the communities in which it operates, and the nation – did not seem second nature.

This narrow conception of corporate purpose has become predominant only in recent decades, however, and it flies in the face of a longer tradition in modern America that regards the responsibilities of a corporation as extending far beyond its shareholders. Owen D. Young, twice chairman of General Electric (1922-'40, 1942-'45) and 1930 Time magazine Man of the Year, told an audience at Harvard Business School in 1927 that the purpose of a corporation was to provide a good life in both material and cultural terms not only to its owners but also to its employees, and thereby to serve the larger goals of the nation:

“Here in America, we have raised the standard of political equality. Shall we be able to add to that, full equality in economic opportunity? No man is wholly free until he is both politically and economically free. No man with an uneconomic and failing business is free. He is unable to meet his obligations to his family, to society, and to himself. No man with an inadequate wage is free. He is unable to meet his obligations to his family, to society, and to himself. No man is free who can provide only for physical needs. He must also be in a position to take advantage of cultural opportunities. Business, as the process of coordinating men’s capital and effort in all fields of activity, will not have accomplished its full service until it shall have provided the opportunity for all men to be economically free.”

This holistic declaration was echoed, albeit in more specific and practical terms, by the chairman of another massive US corporation, Johnson & Johnson, during World War II. In his 1943 “Credo,” a somewhat modified version of which can be found on the company’s Web site today, Robert Wood Johnson II identified five distinct constituencies and established an order of priority in which they would be served by his firm. Johnson & Johnson’s “first responsibility,” he wrote, was to its customers: “the doctors, nurses, hospitals, mothers, and all others who use our products.” In second place came employees; in third, management; and in fourth, “the communities in which we live.” The interests of the stockholders, the corporation’s “fifth and last responsibility,” appear subordinate in his mind both to the firm’s sound operation, which depends on attention to the interests of the other constituencies, and to its long-term welfare:

“Business must make a sound profit. Reserves must be created, research must be carried on, adventurous programs developed, and mistakes paid for. Adverse times must be provided for, adequate taxes paid, new machines purchased, new plants built, new products launched, and new sales plans developed. We must experiment with new ideas. When these things have been done the stockholder should receive a fair return.”

A Shift in Accountability

By 1978 the era of deregulation had begun and signs had appeared that corporate attitudes were shifting. In that year another GE chief executive, Reginald H. Jones, wrote that the “central principle of the present system is that a director’s accountability is to the owners of the enterprise.” Having set aside the broader visions of corporate duty held by his GE predecessor Young and by Johnson, Jones in effect moved the firm’s responsibility to its shareholders from last on the list to first: “If this principle is abandoned, if other corporate constituencies are placed on a plane with shareowners, if directors are required to represent directly the interests of nonshareowner groups…there will be no clear measure of directors’ responsibility because there will be no clear consensus on primary corporate goals.”

His personal preferences aside, however, Jones realized that Americans were not yet ready to accept firms’ turning their backs on the general good, and that he and his fellow executives had something to gain from being accommodating:

“If the concern is social responsiveness, or ‘public accountability,’ the short answer is that in this country at this time, no large corporate enterprise can afford to be perceived as oblivious or contemptuous of matters of genuine social or public concern. These enterprises have to earn from the general public and their political representatives – and earn from year to year – the right to continue to function without radical new governmental constraints.”

The dawn of Ronald Reagan’s presidency found the corporate community on the fence. The “Statement on Corporate Responsibility” issued in October 1981 by the Business Roundtable, which groups the CEOs of the largest US firms, recognizes six constituencies – customers, employees, communities, society at large, suppliers, and shareholders – as forming the “web of complex, often competing relationships” within which corporations operate. It accepts the idea that “shareholders have a special relationship to the corporation” but doesn’t allow their interests to trump all others:

“Balancing the shareholder’s expectations of maximum return against other priorities is one of the fundamental problems confronting corporate management. The shareholders must receive a good return but the legitimate concerns of other constituencies also must have appropriate attention. Striking the appropriate balance, some leading managers have come to believe that the primary role of corporations is to help meet society’s legitimate needs for goods and services and to earn a reasonable return for the shareholders in the process. They are aware that this must be done in a socially acceptable manner. They believe that by giving enlightened consideration to balancing the legitimate claims of all its constituents, a corporation will best serve the interest of the shareholders.”

Even after eight years of Reagan and amid the burgeoning of free-market ideology, the Business Roundtable remained reluctant to place shareholders first, affirming in 1990 that “corporations are chartered to serve both their shareholders and society as a whole” and adding creditors to the 1981 list of constituencies, which it otherwise retained intact. It was only in 1997, in a new statement whose title substituted “Corporate Governance” for “Corporate Responsibility,” that it renounced attempts to balance the interests of corporate constituents and, having reversed its view, argued that taking care of shareholders was the best way to take care of the remaining stakeholders, rather than the other way around:

“In the Business Roundtable’s view, the paramount duty of management and of boards of directors is to the corporation’s stockholders; the interests of other stakeholders are relevant as a derivative of the duty to stockholders. The notion that the board must somehow balance the interests of stockholders against the interests of other stakeholders fundamentally misconstrues the role of directors.”

This doctrine, known as “shareholder primacy,” now reigns in the corporate world today, and it has so increased the power of those whom it has benefited that it will not be easy to dislodge. Those who propagate it believe, or would have us believe, that it is based in law; in fact, it is supported by no more than ideology. They believe, or would have us believe, that it reflects incontrovertible and eternal truths; in fact, it is an expression of transient self-interest. They believe, or would have us believe, that it honors long precedent – but, as we have seen, its ascendency is recent, and, rather than honor it undermines precedent. Yet despite these contradictions, corporations and their allies have been exceedingly successful at selling their viewpoint to the American people.

An important step toward countering their influence can come in refusing to accept the legitimacy of shareholder primacy. Up to now, this fad has had the power to neutralize opposition in part because it has obscured the tool needed to challenge it: a clear understanding of the economic realities. For this reason, we must learn what contributions all stakeholders – not just the shareholders, but all the others as well – make to the corporation, and the extent of the risks and rewards those contributions truly entail. We must learn about the interrelation of business and government in all its complexity, going far beyond the headlines about taxes and regulation to discover who needs whom for what, and who does what for whom. And we must learn what rights corporations legitimately hold, what privileges they enjoy, and what duties they are obliged to carry out.

Without this effort, without this knowledge, we are in danger of continuing to be held captive by a fad.

The Tax Question

What's Fair?By ANDREW LEVINE

Who knows what, if anything, congressional Tea Partiers and their fellow travellers had in mind when they signed on to Grover Norquist’s “no new taxes” pledge. Those not in the grip of obscure theocratic doctrines probably thought that the pledge is in line with libertarian positions to which they nominally adhere. But this thought is more aspirational than real.

In recent decades, a few economists and philosophers have found ways to refashion long discredited libertarian positions; what they have come up with, though flawed, is at least not obviously untenable. And because libertarianism draws on intuitions that capitalist institutions reinforce, their views can seem appealing to otherwise reasonable people. No doubt, this is why, lately, as a bipartisan war on the remnants of capitalism with a human face has gained momentum, libertarian views have come back into the fold.

But no thought out libertarian position justifies the Norquist pledge. The reason why is plain: most libertarians are not anarchists -- they acknowledge a need for at least a minimal state, one that establishes law and order and national defense. Most libertarians also think that there are at least some goods in addition to security that markets cannot supply and that states can legitimately provide. For states to discharge these functions, they require revenue, most of which they obtain through taxation. How much revenue a state needs depends on particular circumstances; therefore the nature and extent of the tax system thoughtful libertarians would support must be sensitive to prevailing conditions. There is no level that can be identified in general, and therefore no way to justify the precise level that pledge-takers regard implicitly as acceptable.

Unless, miraculously, the Bush-Obama tax structure is just right (or perhaps a tad too high) – perhaps due to the interventions of the God of Republican nomination-seekers -- those who take the Norquist pledge place themselves in the grip of an arbitrary constraint. Why would they do that? Surely, not, as liberal pundits claim, because they are committed to a minimal state; “no new taxes” can only get to that (or any other) result by sheer luck. The conclusion is therefore inescapable: insofar as they are not simply doing the bidding of their paymasters, they must think that there is some electoral advantage – either for themselves or for the Republican party – in assuming a stance that is preposterous on its face. They may present themselves as principled political actors but in fact they are only guileful and opportunistic.

The moralistic babble emanating from Democratic quarters is less noxious, but no less confused. Obama Democrats say that they want sacrifices to be shared because it would be unfair if they are not. That is a fine idea, but what it comes down to in practice is that they will endorse the attrition of New Deal and Great Society programs provided plutocrats (“shrewd businessmen” in Obama speak) and corporations (“people,” in the view of his most likely rival) don’t get off scot-free. This position is not only shamefully tepid; it is myopic.

Lets stipulate that, as philosopher John Rawls famously put it, justice is “the first virtue” of social institutions as truth is to scientific theories; and lets further agree to think of justice as fairness rather than, say, adherence to irrefragable property rights. as some libertarian philosophers insist. Then fairness matters preeminently; and, insofar as there is a problem we collectively confront, it follows that everyone should contribute his or her fair share towards its solution. A general commitment to fairness leaves open what this entails in practice, but let that pass.

Lets also concede that the deficit is a problem of this sort, leaving aside all the ways that Wall Street recklessness created the conditions for it, and how the Obama administration collaborated with the Republican leadership in contriving it. Lets even ignore how eminently fixable the problem is. There is no need for radical solutions: the long term deficit would be even less of a problem than it was a decade ago if we restored the tax structure of the pre-Bush years, cut military and other “national security” spending to pre-9/11 levels and, for good measure, enacted genuine health care reform so that costs come into line with those of other advanced countries.

Finally, lets concede that the long-term deficit problems we confront constitute an immediate “crisis.” This has become conventional wisdom at least since Obama signaled in his 2010 State of the Union address that he’d join Republicans in promoting the idea. It is patently false, but let that pass too.

In other words, contrary to almost all the relevant facts, lets suppose that our deficit problems are like the problems people face in the aftermath of a natural disaster – that they affect us all equally, and that we must resolve them together. Then indeed it would be unfair for the rich – or any other sector of the population -- to shift their fair share of the costs of dealing with the deficit onto others, just as Obama and other leading Democrats proclaim.

To be sure, it isn’t clear what a fair distribution of burdens would look like in this case; the idea floated by Obama – from which, true to form, he is sure to retreat -- that a dollar of taxes should balance a dollar of spending cuts is every bit as arbitrary as acquiescing to the existing tax structure while categorically rejecting any and all “revenue enhancements.” But this too is not the main problem.

The main problem with what the Democrats are promoting is that it is confused: because in ascertaining what fair taxation involves, it is indefensible and misleadingly myopic to focus, as they do, just on taxes themselves. To do so is to fall back into the spontaneous – and indefensible – libertarianism to which Republicans implicitly appeal, according to which justice is not about fairness, but about accommodating to property rights that are somehow given before considerations of fairness kick in. In proper libertarian fashion, Obama’s position regards taxation as a (justifiable but unfortunate) imposition upon a morally defensible economic system constituted by capitalist market relations.

In reality, taxation is only one aspect of a larger economic system in which property rights, public policy, and the means through which the state finances itself are joined together into a seamless whole. It is this entire system, not one of its integral parts taken in isolation, that is the proper unit of analysis in ascertaining the justice (or fairness) of the distribution of burdens and benefits.

What justice requires with respect to economic systems is among the most investigated issues in social philosophy. But because all plausible views appeal to a core notion of fairness, according to which like cases should be treated alike, and because they all adhere to the fundamental conviction, inherent in the idea of morality itself, that, where moral principles obtain, all persons count equally, they all share one very general feature: that there is a presumption for equal treatment and therefore, where the distribution of burdens and benefits is at issue, for equal distributions.

This does not mean that justice requires equal distributions; only that equality is, as it were, the default position from which deviations must be defended. Presumptions can be and typically are overridden.

Needless to say, there is no general consensus on what must be the case for inequalities to be justifiable. But it is extremely unlikely that tax increases for the well-off equaling the dollar amount of cutbacks in services suffered by the poorly off could follow from any defensible view.

Thus there is no conception of equality or theory of justice from which Obama’s position follows. His moralizing is not principled; it is meretricious. It has less to do with just taxation, than with getting the victims of an unjust economic regime to go along with policies that, except for being more flexible, are in line with those Republicans favor.

In the distant pre-Clinton past, when Democrats were more generous in spirit and less philosophically confused, the conventional wisdom was that equality is indeed an estimable value but that “efficiency” – in other words, high levels of productivity -- is too. It was then thought that these ideals are sometimes at odds, presumably because egalitarian social policies give rise to an incentive structure that discourages productive labor. The problem, then, is to strike a balance between two partially conflicting ideals by trading off efficiency for equality and vice versa.

This very salutary and progressive view was not without its problems, in part because efficiency and equality are not as much at odds as is widely supposed. But there is no need to delve into that issue here because it is plain that the principal beneficiaries of today’s tax policies are hardly incentivized to work hard to advance the real economy. In this stage of capitalism, the generation of real wealth has given way increasingly to the remunerative but socially useless and ultimately parasitical task of making money out of money.

Thus if fairness is the issue and if myopia is overcome, what is called for are policies vastly more far-reaching than the Democrats’ starting-point negotiation position, and more far-reaching too than the far saner positions Democrats used to advance. But, of course, anything like that is entirely off the table in Obama’s bipartisan America.

Corporation names to become the new dot coms

By Reuters  |  Monday, June 20th, 2011

SINGAPORE (Reuters) - good.food, learnto.salsa, glossy.lipstick -- people and companies will be able to set up a website with almost any address by the end of next year if they have a legitimate claim to the domain name and can pay a hefty fee.

The Internet body that oversees domain names voted on Monday to end restricting them to suffixes like .com or .gov and will receive applications for new names from January 12 next year with the first approvals likely by the end of 2012.

And they can be in any characters -- Cyrillic, Kanji or Devanagari for instance, for users of Russian, Japanese and Hindi.

"It's the biggest change I think we have seen on the Internet," Peter Dengate Thrush, chairman of the Internet Corporation for Assigned Names and Numbers (ICANN), told reporters.

"We have provided a platform for the next generation of creativity and inspiration."

The new gTLD, or generic top-level domain, program was approved by 13 votes to one with two abstentions by the board of ICANN at a meeting in Singapore.

The sole opposition came from a member who felt that more time was needed to hold discussions with government and others parties, ICANN officials said.

The new names could infringe on social and religious sensitivities, for instance if someone wanted to set up a .nazi domain, said Dengate Thrush.

And people who have invested in securing lucrative .com domains will find the value of the holdings diluted by the new rules, he added.

Thrashing out the rules and overcoming objections has taken years, ICANN officials said.
For instance, while the new steep charges of $185,000 to apply for a domain name could deter cyber-squatters, companies with well known trademarks worry that they may have to contend with series of copycat names like coke.paris or google.zambia.

ICANN hopes to weed these out in an intensive approval process that will take months, at the least, and also involve governments and other agencies.

"I think we've crossed the Rubicon," said Antony van Couvering, CEO of Top Level Domain Holdings Ltd.

"We were expecting it to happen some time in 2009," he said, adding that the change was also delayed by governments wanting to handle trademark issues in their own countries. "The process has been so lengthy that some people who wanted to do it are now either broke or disgusted."

COMPANIES

Experts say corporations should be among the first to register, resulting in domain names ending in brands like .toyota, .apple or .coke.

The move is seen as a big opportunity for brands to gain more control over their online presence and send visitors more directly to parts of their sites -- and a danger for those who fail to take advantage.

Japanese electronics giant Canon, for instance, has already said it plans to apply for rights to use domain names ending with .canon.

Besides the $185,000 to apply, individuals or organizations will have to show a legitimate claim to the name they are buying. ICANN is taking on hundreds of consultants to whom it will outsource the job of adjudicating claims.

Today, just 22 gTLDs exist -- .com, .org and .info are a few examples -- plus about 250 country-level domains like .uk or .cn. After the change, several hundred new gTLDs are expected to come into existence.

As well as big brands, organizations such as cities or other communities are expected to apply.
GTLDs such as .nyc, .london or .food could provide opportunities for many smaller businesses to grab names no longer available at the .com level -- like bicycles.london or indian.food.

"It's the next expansion of the Internet, it's the future of the Internet," said Kieren McCarthy, the CEO of .Nxt,Inc, a San Francisco-based company which covers Internet policy and governance issues.

"I think our kids will think that we were crazy to always talk about .coms."

Companies Using Piles Of Cash To Buy Back Stock, Not Generate Jobs

by Jia Lynn Yang - Thursday, October 7, 2010 by the Washington Post

For months, companies have been sitting on the sidelines with record piles of cash, too nervous to spend. Now they're starting to deploy some of that money - not to hire workers or build factories, but to prop up their share prices.

Sitting on these unprecedented levels of cash, U.S. companies are buying back their own stock in droves. So far this year, firms have announced they will purchase $273 billion of their own shares, more than five times as much compared with this time last year, according to Birinyi Associates, a stock market research firm. But the rise in buybacks signals that many companies are still hesitant to spend their cash on the job-generating activities that could produce economic growth.

Some companies are buying back shares partly because they don't want to invest in developing new products or services while consumer demand remains weak, analysts said.

"They don't know what they want to do with all the cash they're sitting on," said Zachary Karabell, president of RiverTwice Research.

Historically low interest rates are also prompting some companies to borrow to repurchase shares.

Microsoft, for instance, borrowed $4.75 billion last month by issuing new bonds at rock-bottom interest rates and announced it would use some of that money to buy back shares. The company already has nearly $37 billion in cash, but much of that money is being held by its operations overseas. The tech company is reluctant to repatriate the money, because it would get hit with a huge corporate tax bill.

A share buyback is a quick way to make a stock more attractive to Wall Street. It improves a closely watched metric known as earnings per share, which divides a company's profit by the total number of shares on the market.

Such a move can produce a sudden burst of interest in a stock, improving its price.

Among the biggest buybacks so far this year: Hewlett-Packard, the world's biggest maker of personal computers, said in August it would spend $10 billion buying its shares. Its shares rose 1.5 percent after the announcement.

In March, the giant snack-food maker Pepsico announced it would raise its dividend and buy back as much as $15 billion in common stock over the next three years. The company's shares rose 1.6 percent that day.

Last month, the board of The Washington Post Co. authorized executives to buy back as much as 750,000 of the company's Class B shares. Its stock went up 4.3 percent on the day of the announcement.

Hewlett-Packard, for one, said it is doing buybacks to maintain the number of shares outstanding after employees cash in their stock options.

But critics say buybacks are a shortsighted way for companies to offload cash when they would be better off investing for the future.

"It's totally wasted money," said William Lazonick, a professor at the University of Massachusetts at Lowell and director of its Center for Industrial Competitiveness. "It does not do anything long-term for companies."

Lazonick added that executives like buybacks because they boost their own stock options.

Defenders of the practice say companies are better off buying back shares if they don't see opportunities to spend while demand remains weak.

"There are times when the best thing to do might well be to buy back your stock and issue it back again at higher prices," said Jim Paulsen, chief investment strategist at Wells Capital Management. "There's nothing wrong with that."

Buybacks have become more popular in recent months as companies look for ways to spend the massive cash piles.

Nonfinancial companies held $1.8 trillion in cash and short-term assets at the end of the second quarter, according to the Federal Reserve. That is just slightly lower than in the first quarter, when corporate America set a record for cash holdings.

A third-quarter survey of nearly 1,000 chief financial officers by Duke University and CFO Magazine found that the executives' optimism about the U.S. economy had dropped by more than 15 percent compared with the previous three months. That is nearly as low as survey results from the first quarter of 2009, when the economic turmoil was in full swing. Half of the CFOs said their companies will keep clinging to their cash, and only 0.7 percent said they expect to hire more full-time employees.

Obama Economic Team Bails, System Fails to Generate Jobs

Are the Causes, Um, 'Structural'?
by Danny Schechter | Monday, August 9, 2010 by CommonDreams.org

In Washington, the Obama economic team has sprung a leak. First, Budget Director Peter Orszag, the calculating numbers savant, bailed. And now, "distinguished" economist Christina Romer, the only woman in that inner circle boys club has quit too. (Would you want to be around Larry Summers all day long?)

Why this crew of losers wasn't fired eludes me despite their claims of having prevented a worse collapse. No doubt, they know more than they are saying, and, perhaps, now that they are no longer selling, they may be willing to do some telling on just how bad it is and what went wrong.

Who's next? Could Ben Bernanke be leaving the Fed for Fed-Ex?

Economist Max Wolfe has none of the political restraints of power. At the news of another 131, 000 jobs gone, at all the talk of permanent unemployment as the "new normal," he sighed with a tinge of optimism:

"We have been in the present labor market swoon since December 2007. We are 30 months into the process. Nearly everything is not getting worse fast. Most economic indicators have seen slow, uneven progress. We are a weary nation and hope, is running low. All lethality is dosage and we have received a massive dosage- an overdose- of bad economic news since the winter of 2007. Things are getting ever so slightly less bad in the aggregate.

"The sheriffs of this rough economic neighborhood are running low and out of ammunition. The populace is fed up. Our Sheriffs are The Treasury and The Fed and they have spent, cut taxes, slashed rates, bought securities and ballooned their balance sheets. They have made the bad less worse, but not appreciable better enough for many. All that economic toxin still pumps the blood of this economy. Now, the state is having a contractionary direct impact on employment."

"Contractionary"? I am a first-time contractionary word user so I will leave it to Stephen Colbert to take that term apart, but it can't be a good thing.

The bigger surprise is being buried. The more serious problem is more systemic and rooted in the structure of our economy. These structural problems used to be referenced to show how deep the rot goes and why more fundamental reforms are needed, but now, as Paul Krugman has argued, this very idea is now being used to encourage acceptance of the problems because they are beyond repair, as in, "we can't change that because it is, so, um, 'structural'!") Thus, the existing power relations can't be questioned because they are the existing power relations

Makes sense, doesn't it?

Part of the problem is that while the livelihoods of workers and homeowners are sinking, the economic and political elite is doing just fine, as the Automatic Earth Website explains:

"Perhaps what we witness is an ongoing and deepening chasm that divides the world of finance and politics on the one hand and the world of everyday people on the other, as Rasmussen Reports indicates: 67% of Political Class Say U.S. Heading in Right Direction, 84% of Mainstream Disagrees. This chasm was greatly facilitated by governments relying on policies based on the notion that too-big-to-fail -financial- institutions needed to be bailed out at any cost. Later in the year, as a direct consequence of these policies, we will see another round of insane banker and trader bonuses, just as citizens' sentiments and incomes fall, and unemployment and poverty keep rising."

When you create and enable a casino economy, the public becomes a player too, taking risks they shouldn't at the behest of bankers and finance companies who assure them all is fine.

Last week, Countrywide, the country's mortgage fraud factory, reached a settlement with the SEC for more than Goldman Sachs settled its last complaint for a whopping $600 million. Their shark-in-chief, Anthony Mozillo, still facing a criminal investigation, later said he was pleased when the federal regulators admitted that the investors were not defrauded, because they knew what kind of projects they were funding. How reassuring!

So the circle of complicity widens. We now learn that the companies and individuals that invested in the subprime/subcrime mortgages KNEW people were being ripped off but did it anyway because there was so much money to be made.

And because security laws only protect investors, who were defrauded, many have no case. What about the borrowers, the homeowners now facing foreclosure? They are apparently not worthy of protection. This is comparable to the Madoff investors who profited in his illegal scheme and knew his returns were too good to be true but shoveled money to him anyway. They became partners in the ponzi, not just "victims" trying to be made whole.

Is anything changing? The banks say they will not change the way they finance mortgages so it is still buyer beware. The Wall Street Journal reports another instant crash of the markets is possible. And General Motors that was down and on the way out is back thanks to the government's largesse but sniping at its rescuers, insisting an end to government ownership would be good for their image and "employee morale." Huh?

"We want the government out period," blusters GM's ungrateful CEO Edward E. Whitacre Jr. This same company recently spent $3.5 billion buying a new subprime lending company to replace GMAC, the GM lender whose bad loans sunk GM. On top of that, these geniuses just produced The Volt electric car that sells for $40,000, hardly a brilliant move in this economy. Of course they blame all their problems on the government, never themselves.

Like so many others, they seem to be banging on Obama, everyone's target of choice. If that's your inclination, let's blame him also for what he has not done.

He hasn't led a consistent push back against Wall Street, perhaps because he hopes in vain that big business will create private sector jobs and wants to show naysayers how pro-business he really is. This has turned him into an inversion of FDR.

As Ezra Klein of the Washington Post observed:

"The reality is that America's supposedly anti-business president has led an extremely pro-business recovery. Businesses are sitting on about $2 trillion in cash reserves. Business spending jumped 20 percent last quarter, and is up by 13 percent against 2009. The Obama administration has dropped taxes for small businesses and big ones alike."

So much for that canard.

Is there anything to be done? There is no shortage of proposals for jobs programs and taxes on transactions, for tougher rules on derivatives, and imposed compensation limits. In most cases the US, with pressure from Wall Street and its political allies, has opted for easily maneuvered around and malleable regulations.

One small reform has been proposed by the much-maligned Ralph Nader for those of us who live in the appropriately named "Empire State," one that currently shelters a Wall Street where hedge fund managers make billions.

Nader notes, "Low-moderate and middle-income New Yorkers already pay a higher percentage of family income in state and local taxes than do the richest one percent of New Yorkers!

"Surprisingly, there is a simple way to eliminate the state deficit and prevent tens of thousands of layoffs and large service cutbacks.

What most New Yorkers do not know is that for about a century there has been a state stock transfer tax on purchases of securities. This year, this tax, similar to ones imposed in 30 other countries, will amount to about $16 billion. Amazingly, since 1979, this tax has been instantly rebated by New York State back to the brokers or clearinghouses who paid it. A 100% rebate every year for the bailed out industry that caused the recession and its immense human damage."

Putting a stop this sleazy practice could be as important in phasing out the Bush tax cuts but so far it's not on anyone's agenda, Dems, Repugs or Media.

Maybe because they think of it as "structural."

Corporations Want Fewer Workers, But Still Need Everyone to Be Consumers

The Economic Crunch We're in
The recession has been a way for employers to cull payrolls -- and to discover that many jobs don't have to be filled again.
By Robert Parry, Consortium News
July 16, 2010

A hard truth about the U.S. economy is that corporations don’t need as many of us as workers but still need us as consumers. That dilemma helps explain why unemployment is stuck near 10 percent and why the economic recovery is stumbling toward a double dip.

The Washington Post reported Thursday that nonfinancial companies are sitting on $1.8 trillion - about one-fourth more than at the start of the recession - but won't add personnel in part because they're waiting for consumer demand to pick up, which isn't happening because many Americans don't have jobs or are afraid of losing theirs.

Yet, even if that vicious cycle could be broken, there's another reason for the lack of hiring: companies have found they can make do with a lot fewer American workers. The recession has been a way to cull payrolls - and to discover that many jobs don't have to be filled again, either because of new technologies or because the jobs have been shifted overseas.

Both these trends predated the recession but the rapid shedding of jobs since the Wall Street financial crash in 2008 - some eight million jobs lost - has spotlighted this structural change. Further, corporate determination to remain "lean" has turned the worker-surplus issue from a personal crisis for many American families into a systemic one for the country's economy.

Predictably, the free-marketers at CNBC and the Wall Street Journal have echoed the political message of the Chamber of Commerce and other right-wingers who blame the sluggish rehiring on the Obama administration's health-care reform and the likelihood that President George W. Bush's tax cuts for the rich will lapse.

That view fits with Ronald Reagan's economic orthodoxy which has dominated the United States for the past three decades. It holds that the answer to the nation's economic woes is always to cut taxes especially for the rich, to trust in corporate self-regulation, and to crack down on unions.

Yet, the realistic answer to America's sorry economic state would seem to be the opposite: to raise taxes on the rich so investments can be made in the national infrastructure of education, transportation and technology; to impose reasonable regulations on corporations to prevent dangerous excesses and risks; and to ensure that workers (and consumers) get a fair shake.

Through the federal taxing power, Washington could put Americans to work preparing the nation for the future, building high-speed rail, developing clean energy, improving education for all, advancing medical technologies, repairing the environment, and addressing a host of other national priorities.

The Media Imbalance

But a second hard truth about today's America is that the political/media structure is such that these steps are almost unimaginable. In the power centers of New York and Washington, in particular, Corporate America and its right-wing allies have built a propaganda apparatus that makes any serious discussion of these options political suicide.

This propaganda machinery, which reaches across the United States through right-wing talk radio, Fox News and a variety of other outlets, guarantees that any politician (or media personality) who pushes too hard or too effectively for questioning the Reagan orthodoxy will be demonized.

President Barack Obama is only the latest politician to learn this lesson. Though many on the American Left denounce Obama as a weak-kneed centrist too eager to compromise, he is portrayed to the rest of America as a radical socialist, sometimes even likened to Hitler and Stalin.

It doesn't matter that these comparisons are as absurd as they are offensive. The point about propaganda is that if ugly attacks are repeated enough about some individual, many in the public will be influenced, consciously or subconsciously, to think of the person in a negative light.

And as that trend gains momentum - as the politician's polls sink - the mainstream media will go with the flow, endlessly reprising stories about the person's slipping popularity and thus hastening the political decline.

This pattern is almost inevitable unless there is a counterforce within the media that challenges the lies and distortions. But today's America has almost no Left media to speak of, at least nothing that compares with what the Right has built, and what Left media does exist tends to resent the political compromises that Obama and other Democrats have made.

Thus, the media asymmetry causes Democratic politicians to make more compromises, hoping to limit the Right's ability to demonize them but further alienating and demoralizing the Democratic base.

So, the outcome of Election 2010 seems likely to follow the same course as Election 1994, the last time a new Democratic president was in office and tried to enact some watered-down reforms. Again, Republicans are expected to win - and win big - which would then put them in position to block whatever is left of Obama's agenda and thus turn him into an actual (or virtual) lame duck.

Though Bill Clinton did win reelection in 1996 against a weak Republican opponent (Bob Dole) with the help of a third-party candidate (Ross Perot), Clinton had to confine his second-term ambitions to "micro-programs" and to changes favored by the Republicans, such as the removal of Great Depression-era regulations of the banking system (a "modernization" that set the stage for the 2008 financial collapse).

Investigating Obama

If Republicans gain control of at least one house of Congress, they would surely launch a wave of investigations against Obama, much as the GOP did against Clinton.

Unlike the Democrats who shy away from investigative controversies - turning their backs even on historic scandals such as Iran-Contra, Iraq-gate and contra-cocaine trafficking in the 1980s as well as George W. Bush's torture abuses and illegal wars last decade - the Republicans have no such qualms.

They pounced all over trivial Clinton "scandals" like Whitewater and Travel-gate and impeached Clinton for lying about sex (though they could not muster a super-majority in the Senate for conviction). And Rep. Darrell Issa, R-California, has vowed to be similarly aggressive now if he gains control of the House oversight committee next year. [Washington Post, July 4, 2010]

So, with Obama embattled and the Democratic congressional majorities likely to shrink or disappear, the chances for the United States to confront its structural problems will only worsen.

With unemployment staying high, many middle-class Americans will sink into a growing under-class. The rich will fight to keep as much of their oversized salaries and bonuses as possible, with the Republicans ensuring that the one political sure-thing will be that legislated tax increases won't happen.

Indeed, the simplest way to address the nation's myriad of problems - by restoring the marginal tax rates for the rich back to the historical levels of, say, the Kennedy era (around 60 percent on their top income) - is the one thing that is almost impossible to contemplate.

Since Reagan's presidency, the Republicans have been determined to "starve" the government of resources so it can't address problems like climate change, renewable energy, education, transportation, health care, housing, etc. The only big expenditure that the GOP won't cut is military spending, especially for overseas wars.

Though the Republican vision of the future appears to guarantee a continued decline in the quality of American life, the Right's propaganda machinery makes any suggestion about the need to tax the rich more heavily akin to socialism. The Revolutionary War slogan, "no taxation without representation," has been transformed to something close to "no taxation, period."

Remember the famous encounter between candidate Obama and "Joe the Plumber," who decried Obama's idea about the need to redistribute wealth from the upper-income levels to middle- and working-class Americans so the economy would work better.

That debate remains at the center of America's economic struggles, as it has been since the Great Depression when income inequality and financial speculation were two key factors in the mass unemployment that followed the Crash of 1929. Two lessons learned were that a strong middle class and reasonable government regulations were necessary for a healthy economy.

New Consensus

That New Deal consensus held until 1980 when a new Reagan-era consensus took hold, claiming that tax cuts tilted toward the wealthy and reduced regulation of corporations were the route to prosperity. A corollary was that the wealthy deserved the lion's share because of their intelligence and hard work.

Reagan and the Right sold many Americans, including large numbers of people from the lower economic strata, on the idea that it was unfair for the government to use the tax system to reverse the consolidation of wealth and the political power that went with it.

However, the counter-argument is that virtually every rich person in the United States has benefited from the investment of taxpayers' money in creating the conditions for business success, from public education of workers, to the transportation infrastructure for shipping goods, to the research and development that opened opportunities in computer technology, medicines and the Internet.

Indeed, to ensure that the benefits from these government investments are shared with some equity would require that the excess income at the top be recycled into other improvements of the nation's infrastructure and the quality of life for all Americans.

In other words, by raising taxes on the rich, Washington could help create the jobs needed for addressing national problems and simultaneously break the vicious cycle that has left nearly 10 percent of Americans unemployed, the key fact that has depressed consumer demand.

However, to change the dominant Reagan-era ideology - and thus to change America - would require smart investments from progressives in the information battles for the hearts and minds of the American voters.

Only with the Right's orthodoxy challenged and the American people understanding their real choices might politicians gain the confidence and courage to do what's needed to get the United States back on the path of a healthy economy - and toward a revived democracy.

Despite Pledge to Curtail Corporate Earmarks, Politicians Pursue Them

Some Members of Congress Funnel Tax Dollars for Businesses Through Universities and Nonprofits
by David Heath, Tuesday, July 6, 2010, Huffington Post Investigative Fund

This March, House Appropriations Committee chairman David Obey pledged to stop colleagues from steering millions of dollars in no-bid contracts to businesses, a controversial practice used by politicians to please constituents and boost pet projects, and which sometimes benefits campaign donors.

Restricting so-called corporate earmarks, declared House Speaker Nancy Pelosi, would help end the “culture of corruption” in Washington by limiting the influence of lobbyists while ensuring that companies “no longer reap the rewards” from special favors.

In a joint statement that grabbed headlines – even though it applied only to one-tenth of all earmark requests – Obey and Norm Dicks, D-Wash., chairman of the defense appropriations subcommittee, declared that they “will not approve requests for earmarks that are directed to for-profit entities.”

But that apparently hasn’t stopped some members of Congress from trying – including eight of the 60 members on the appropriations committee. Instead of naming companies as direct recipients of earmarks, as they have in recent years, some members appear to be attempting to funnel money to those same businesses through nonprofit organizations.

Among the politicians are Dicks, Rep. James Moran, D-Va., and Rep. Marcy Kaptur, D-Ohio – all of whom made the requests just after being cleared last February in a House ethics investigation into whether they had traded favors for campaign donations.

In all, the Huffington Post Investigative Fund found 18 instances in which the eight members are seeking to keep alive previous grants to businesses by listing a university, research center or other nonprofit as the recipient this time around.

While some of the earmark requests appear to involve a sharing of federal dollars between the non-profits and the businesses, in at least two instances intended recipients acknowledged they intended primarily to allow money to pass through to corporations. In two instances, some of the same people work for the nonprofit and the corporate beneficiary.

Similar findings were reported today by The New York Times, which said it had identified “dozens” of such earmark requests totaling $150 million that would indirectly benefit profit-making companies. Obey’s spokesman, Ellis Brachman, said the committee can and will block any requests that violate the restrictions announced by Obey and Dicks in March. But the task is daunting if not impossible, given the sheer volume of requests for earmarks – tens of thousands of them amounting to some $16 billion in federal spending last year.

“No matter what they tell you, there is just no way they can police all that,” earmark critic Jeff Flake, an Arizona Republican congressman, told The Times. “They just don’t have the time or resources.”

No comprehensive list of earmark requests exists, so it’s difficult to tell how many members of the committees or in Congress overall are still pursuing earmarks benefiting companies.

Even on its face, the Obey-Dicks restrictions on earmarks were viewed as minimal at the time they were announced; only 1,000 of all earmark requests involve businesses. Some 90 percent of all earmarks are designated for organizations such as charities, nonprofits and educational institutions - spurring predictions that members of Congress, lobbyists and corporations would use these allowed earmarks to keep the money flowing to businesses.

House Republicans vowed for a year to restrict all earmark requests – not just those going to companies.

The Investigative Fund identified businesses that could benefit from earmarks naming nonprofits by reviewing military spending-related requests from members of the House Appropriations Committee. Specifically, the Investigative Fund simply compared for-profit earmarks secured last year with the language of earmarks requested by some of the same lawmakers this year.

While the named recipients varied, the description of the project being funded was similar if not identical in language, which is usually tucked into larger pieces of legislation.

Many universities collaborate with businesses on endeavors that are legitimate and produce meaningful results. But Flake scoffs at the notion that research collaborations with universities are acceptable when it comes to targeting money specifically as favors requested by individual members of Congress. Such collaborations are “coalitions of convenience for the facilitation of earmarks,” he told the Investigative Fund.

Appropriations Committee spokesman Brachman declined to discuss specific requests. But he said but each earmark would be reviewed separately. Obey, he said, “is very serious about the ban on for-profit entities.” The committee “will not fund earmarks going to for-profits,” he added.

Congressional aides, asked about the continuing requests despite the restrictions, told the Investigative Fund that rules have never been spelled out. The only guidance is a press release – the one released by Obey and Dicks.

Back in March, Steve Ellis, vice president of the Taxpayers for Common Sense, a nonpartisan watchdog organization on government spending, questioned in news media interviews whether Congress could restore public confidence by restricting only one-tenth of all earmarks. He wanted an all-out ban.

Steering money through nonprofits to for-profit companies won’t improve perceptions, he says now. “Trying to finesse your way around it with lawyerly excuses really feeds voter cynicism."

Officials at some of the nonprofits acknowledged in interviews that they expect to receive only a share of the money for collaborating with the companies in research. In a few cases, the nonprofit expects to keep little or nothing. And some of the nonprofits appear to have close ties to the company.

For example, Rep. James Moran, D-Va., last year secured an earmark to a health clinic and small company, HealtheState, that is trying to commercialize free medical-records software developed within the Defense Department. This year, Moran has asked for $2.5 million again, which would go to the clinic and a nonprofit called Prometheus Foundation.

The foundation lists as its contact, Jill Phillips, an officer at HealtheState. Last year, Phillips donated $4,000 to Moran’s campaign. The foundation’s Web site, which describes its primary mission as helping the “technology transfer” of the medical-records software, lists HealtheState as its partner.

Phillips could not be reached for comment. Moran’s spokeswoman he was “comfortable the funding request meets the appropriate guidelines” and that if the earmark is approved, “it will go to a most worthy non-profit in our district.”

Rep. Tim Ryan, D-Ohio, has requested $1.5 million for research on behalf of an arm of the Forging Industry Association, which is involved in metals manufacturing. However, the executive vice president of that trade group, Roy Hardy, says he doesn’t have any researchers on staff and so won’t be directly involved in the work.

An Akron, Ohio company, IQ Technologies, lobbied for the earmark with the help of helicopter manufacturers. Joe Powell, the company’s president, said he will use the money to test the company’s exclusive technology for making stronger helicopter parts.

Ryan’s spokesman said he believed partnerships between for-profits and non-profits would still be allowed. Ryan did not identify the company in his request, only the trade association

An Exempt Chairman?

The likely next chairman of the appropriations committee is Dicks. As the defense spending subcommittee’s chairman, he already is in the position to enforce the restrictions he endorsed last March in his press release with Obey, entitled, “Appropriations Committee Bans For-Profit Earmarks.”

But Dicks has himself continued to pursue money for research undertaken by a company in his district.

Since 2004, Dicks has sponsored more than $20 million in earmarks for the tiny startup, Intellicheck Mobilisa. In last year’s earmark request, he named the company, whose executives have donated $26,000 to his campaigns.

This year, the earmark names a subcontractor and collaborator as the intended recipient on the project – the University of Washington.

The research involves technology identified in the earmark request as a “Littoral Sensor Grid” – the same description for Dicks’ earmark directly benefitting the company last year.

The company, which sells a system that scans driver's licenses for retail stores and military bases, secured its first earmark to provide free wireless Internet to passengers on ferries. That morphed into a system for sending security and environmental data collected from waterborne buoys in the Seattle area, for which the company received a $4.5 million no-bid contract last September.

The University of Washington has received $1 million in each of the last two years to provide assistance in the research, according to the contract obtained by the Investigative Fund.

The latest earmark request is for $6.2 million. University spokesman Bob Roseth said it’s unclear how money would be split. He said the company wouldn’t necessarily be involved in the project next year, though he wouldn’t rule it out.

When asked how the company could not be involved in deploying its own technology – the “Littoral Sensor Grid” – Roseth responded, “that’s a fair question.”

A spokesman for Dicks said he wasn’t sure if the ban would allow the company to be involved in the project anymore.

Just weeks before requesting the earmark, Dicks had been among seven lawmakers cleared in a congressional ethics investigation involving suspicions they had traded earmarks for campaign donations. The House ethics committee uncovered evidence that company executives gave campaign donations in expectation of receiving earmarks. But the panel concluded in February that lawmakers were not involved themselves or had no idea of the expectations of lobbyists and companies.

The final report included evidence that one company, 21st Century Systems, had given Dicks a $1,000 campaign donation through its political action committee and was planning to give more, in hopes of getting an earmark. An internal company spreadsheet on campaign contributions to members of Congress proposed giving Dicks another $2,000 and in the next column listed an earmark it was seeking from Dicks.

Dicks told investigators that he does not review Federal Election Commission filings to see who’s giving donations to his campaign and that he awards earmarks only after careful review of their merits.

Earmark University

Also cleared in the investigation was Rep. Marcy Kaptur, D-Ohio, who told the ethics committee that she separates her fund-raising activities from her legislative duties. This year, Kaptur is sponsoring five earmarks for the University of Toledo that last year she directed to private companies.

A research executive at the university, Frank Calzonetti, said Kaptur's office asked earlier this year if the school would be willing to start collaborating with four of the companies seeking earmarks. University researchers were already collaborating with a fifth company, so Kaptur’s earmark this time lists the school as the intended recipient rather than the company.

The name of that company is Teledyne Turbine Engines, which once had a plant in Toledo that at its peak employed 1,100 workers. To save the plant from shutting down, Kaptur helped set up a collaboration with the university in 2003, directing millions in federal dollars to a new research effort.

Included in the ethics office report was a form used by Teledyne to justify contributions from its political action committee. It asks if the candidate is important to any of the company’s program, and in Kaptur’s case, the answer given is that she represents the district where Teledyne Turbine Engines is located and sits on the subcommittee that directs defense spending. The form then asks if the candidate being supported could influence the awarding of government funds. The answer given in Kaptur’s case was “absolutely.”

Teledyne’s legislative affairs director acknowledged in an interview with the ethics office that donations gave him access to lawmakers to discuss legislation and were awarded based on past support the member of Congress provided. In his interview with the ethics office, the company officer “says that it does go through your mind whether you are buying influence.”

In exonerating Kaptur, the ethics office said there’s no evidence that Kaptur was aware of Teledyne’s internal documents or the views of its legislative affairs director.

Now, again, Kaptur is sponsoring a $4.5 million earmark to research Teledyne’s turbine engines. Only this time, she’s lists only the University of Toledo as the intended recipient. Teledyne’s PAC and employees have donated $22,900 to Kaptur’s campaign in the past six years.

One company, American Systems Corp., spent roughly $140,000 on lobbying in the past year, including pursuit for what its public disclosure identifies as an “Enhanced Detection Adjunct Processor.” Kaptur is sponsoring an earmark using the company’s description but lists the recipient as the University of Toledo.

Kaptur declined requests to speak with the Investigative Fund. But she told The Times, in its story on earmark requests, that she’d been pleased alliances formed by defense contractors in Ohio enabled her to resubmit requests that had once been made directly to them. “I am a member who does fight for my region and my state,” the Times quoted her as saying, and adding, “I don’t fight mindlessly.”

Another member of the appropriations committee, Rep. Steve Rothman, is sponsoring a $9.8 million earmark for a start-up company with six employees. Last year, Rothman named Lightening Energy as the recipient. This year, the Congressman lists the unincorporated New Jersey Innovative Technology Consortium as the recipient.

Mark Merclean, the consortium’s sole unpaid staffer, said it is still up to Lightening Energy to do all the work to get the contract and to deal with Congress. “Now if a company gets an earmark, that’s great. It can still go through the consortium,” although the money would end up with the company, Merclean said.

Rothman also requested a $2 million earmark for the New Jersey National Guard. In the Senate, where there is no ban, Frank Lautenberg, D-NJ, is sponsoring what appears to be the same earmark but says the money will go to Telos Corp.

In another instance, Rothman is seeking $3 million for the National Center for Manufacturing Sciences, the same earmark that Lautenberg wants for a Hackensack-based company, ID Systems. Last year, Rothman himself named both Telos and ID Systems as the recipients of these earmarks.

Rothman’s office did not respond to questions about the earmark requests.

One company identified in the Investigative Fund’s reporting admits it set up a nonprofit entity to secure government contracts. Charles Lambert, an Air Force veteran, said that in December he created the nonprofit, Persistent Elevated Solutions, because his for-profit company, Colorado Springs-based Skysentry LLC, was not allowed to bid on an Environmental Protection Agency contract. Skysentry has received earmarks for years for testing lighter materials and more efficient batteries for blimps.

But this time he knew he had to seek a contract as a nonprofit. “There are various government agencies, like the EPA, that restrict bidding to nonprofits,” said Lambert. The company filed with the Ohio Secretary of State and paid a $125 fee to set up the nonprofit.

While Lambert acknowledged that the Army hasn’t shown much interest in funding the research, he estimated it could save the military billions of dollars. “Decision-makers in the Army are supportive but not anxious to kind of stick their necks out and support a new technology,” he said. Rather than restricting earmarks to nonprofit companies, he thinks Congress should vet them better.

“If I feel like I can stand on the steps of one of the presidential monuments and explain to the American public why I think it’s a good thing and anticipate that they are not going to react adversely, I’m not ashamed to go after some of these thing.

Standing with the Corporations in Washington

Festering Corruption
By RALPH NADER

The festering corporate government in Washington, DC, is a theater of the absurd. Some of the acts of this tragedy follow:

1. Start with the often hapless Center for Medicare and Medicaid Services (CMS), the agency that administers Medicare. Medicare pays $1,593 per injection of Lucentis for wet age-related macular degeneration as well as $42 per dose for Avastin, a drug that has a similar molecular structure, used by ophthalmologists.

Both drugs are made by Genentech. Lucentis is FDA approved for the vision problem and the other, Avastin, is approved to treat cancer. Doctors can also use Avastin for vision treatment. A study by three officials of CMS and Dr. Philip Rosenfeld, a retina specialist at the University of Miami, reported that for Medicare patients 60% of eye injections were Avastin, while 40% used Lucentis. Note this: Medicare paid $537 million for Lucentis in 2008 and only $20 million for Avastin!

2. Saving about half a billion a year by using Avastin is small potatoes to another CMS shortcoming. For fiscal year 2009, CMS paid $65 billion in erroneous payments—to deceased doctors, fraudsters, delinquent or imprisoned contractors and other suspended or debarred firms.

Organized fraud of Medicare is becoming more systemic. So President Obama wants CMS to use a new fraud-detection program. Professor Malcolm Sparrow of Harvard University, the nation’s leading expert on health care billing fraud told them how to do this many years ago, but they were not listening.

The President wants to reduce throughout the government “payments in benefits, contracts, grants and loans to ineligible people or organizations,” according to the Washington Post. Better trillions of dollars late over the decades, then never!

3. Five oil company executives, including from BP, admitted at a Congressional hearing this week that they did not have contingency plans worked out for catastrophic failures. What is, by comparison, the worst case scenario for offshore windfarms or solar/thermal conservation, or passive solar architecture? Energy Secretary Stephen Chu still does not note such a criteria to differentiate between energy supply priorities.

4. President Obama now, belatedly, recognizes that the notorious oil industry patsy, the Minerals Management Service (MMS) in the Department of Interior, was a washout non-regulator of offshore drilling inherited from the Bush and Clinton Administrations. Well he also better take a hard look at the Federal Railroad Administration (FRA), the Office of Pipeline Safety (OPS) and the Nuclear Regulatory Commission (NRC), which are variously pleased with being captured by the very industries they are supposed to regulate. Too many agencies, in essence, allow the companies to “self-regulate” – an oxymoron.

Each of these agencies may wake up some day to witness a catastrophic hazardous materials disaster or meltdown that they should have prevented with stronger standards, inspection and law enforcement. Heed this caution, Mr. President!

5. Another $50 billion request by the White House just whisked through Congress for the brutal, spreading, futile war in Afghanistan—the historic graveyard of empires. Republicans loved to vote for this raid on the taxpayers.

But this week, a united Republican cabal, joined by Senators Joseph Lieberman (D-CT) and Ben Nelson (D-NE), blocked a $120 billion package (the threat of filibuster again) to extend unemployment benefits, preserve Medicare payments, extend tax credits for corporate research, raise taxes on oil companies, other big companies and investment partnerships. The bill also includes $24 billion to aid state governments in preventing thousands of state layoffs, including teachers.

The point here is not arbitrarily to decry Republican questioning of this domestic bill. It is to show how an overall ignorant, rubberstamping Congress is not heeding the lessons from Vietnam and Iraq – the immense casualties, the destruction and poisoning of these countries by detonations, and laying waste to the environment, and the imperialist policies that also harmed our country in so many tangible and intangible ways.

6. At the House of Representatives’ hearing this week Congressman Joe Barton (R-TX) apologized to BP’s CEO, Tony Hayward, saying the White House’s demand that BP set aside $20 billion for its huge toxic contamination to the Gulf coast and its people was “a shakedown.” He added, for good supplicant measure, that he doesn’t “want to live in a country” that treats a private corporation this way. He later apologized for his apology, at the behest of Republican House leaders.

The Barton outburst illustrates why it should be easy for the Democratic Party to landslide the Republicans in the 2010 Congressional elections. Probably the most craven version of the Republican Party ever, this team takes huge slurries of corporate money while blocking any safeguards for workers, consumers, small taxpayers, and the environment. They even defeated investor rights for shareholders, who own these companies, but whose bosses pay themselves obscenely to control them.

The Democrats have their hand out to the same commercial interests. But if they want to win, they’d better formulate the language of standing with the people over big business by November. And, if the Democrats don’t want November to mark their curtain call, their language of standing with the people needs to be followed by action.

Corporate Entities as Modern-Day Street Gangs

By Gonzalo Lira - 06-20-2010

This past Monday, June 14, 2010, the Unites States Supreme Court let stand without comment or dissent the Second Circuit Appeals Court decision to dismiss Maher Arar's suit against the U.S. Government. (Arar v. Ashcroft, No. 09-923)

Mr. Arar was illegally detained by U.S. officials while in transit back to his home in Canada, and then handed over to Syrian intelligence officials using “extraordinary rendition”. The Syrians kept Arar for ten months, interrogating him using torture, and finally releasing him when they concluded that Mr. Arar was neither a terrorist, nor in possession of any relevant intelligence.

Once free, Mr. Arar sued both the Canadian government (which peripherally assisted in his kidnapping and torture) and the U.S. government. The Canadian government issued him an unequivocal apology, and $10 million Canadian in compensation.

Mr. Arar did not get any similar justice from the U.S. government, though. The Second Circuit Appeals Court quashed his suit by stating that Congress had not authorized such suits as Mr. Arar’s. (!)

By letting stand the Appeals Court decision to quash the suit Mr. Arar brought against the U.S. Government, the Supreme Court effectively ruled that the Government cannot be held accountable by private citizens for its actions. The Government can do as it pleases to any individual—including assassinating one of its own citizens—and there is no legal remedy.

Now let's compare how the U.S. Government dealt with BP, regarding the oil spill disaster in the Gulf of Mexico: President Obama met with BP officials, and as a product of that meeting, BP promised to set up a “compensation fund” of $20 billion over the next two years.

Note how this was agreed to outside of the ordinary judicial process. There was no suit. Neither did this agreement follow the law. It was simply a deal the White House made with BP. A Republican politician is receiving a lot of grief over having characterised the meeting and subsequent deal as a “shake down” of BP by the Government. This politician is being censured because apparently he sided with BP, the party responsible for the oil spill disaster—clearly the guy is an idiot.

Be that as it may, the politician’s characterization is in fact accurate: The Government did “shake down” BP for the money, in a manner no different from a street gang shaking down a neighborhood grocery store.

In the Arar case, one of the Government’s arguments in favor of quashing the case was that the suit would bring under scrutiny “the motives and sincerity of the United States officials who concluded that petitioner [Mr. Arar] could be removed to Syria.” In other words, the Government was deploying its full weight and power to protect the individuals who had actually ordered Mr. Arar’s detention and deportation to Syria.

Similarly, in the “compensation agreement” whereby BP acquiesced to pay $20 billion, the company as a whole was acting to protect the executives and personnel responsible for the oil spill disaster. (I have yet to read the actual deal memo, but I wouldn't be surprised to learn that, as part of the deal, the Government agrees not to prosecute any BP executive or personnel, either in criminal or civil court. This is pure supposition on my part—but it ought to be the first thing scrutinized once the actual deal memo comes out.)

As a third example, during the financial crisis, when AIG, Fannie Mae and Freddie Mac were all bailed out, none of the executives actually responsible for the firms being in the position that they were in were indicted or punished in any way. The corporations assumed the responsibility of the individuals who had made the bad decisions.

As a fourth example, the unions, in both the public sector and the private. GM’s unions forced the company to assume pension and health care liabilities which any actuarian would have realized would eventually bring about GM’s bankruptcy—which of course is exactly what happened. Teacher's unions across the U.S. refuse to implement basic competency tests on their members, threatening to strike if such tests are imposed, even going so far as to protect not merely incompetent teachers, but pedophiles—and these are the people who are supposed to be educating America’s youth.

A fifth example: The U.S. military. Soldiers routinely violate human rights of Iraqis and Afghans, in the most despicable, egregious manner imaginable. Yet they get away with it, the military going out of its way to protect its soldiers, under the rationale that to prosecute gross human rights violations would “erode the morale of the troops”. In the Abu Ghraib torture scandal, a half-dozen non-commissioned officers were jailed—but apart from a lone Lieutenant Colonel being tried and acquitted of a couple of minor charges, no officer was tried, and none jailed.

All of this underscores the same problems we are having throughout our society in the Industrialized West: Corporate entities, be they corporations, unions, the military, or the government, act lawlessly—anarchically—trampling the individual without hesitation, yet coming to accomodations between one corporate entity and another.

In other words, our society has become a neighborhood where street-gangs—corporate entitites—battle one another for position. Even the Government is just another street gang.

People allied with a particular corporate entity have rights and the full protection of the corporate entity to which they belong, much as street gangs are fiercely loyal to their individual members. The higher up in the corporate entities’ hierarchy—CEO, General, President—the more untouchable he or she is.

However, unaffiliated members—such as Mr. Arar, such as myself—have no such protection. Neither do they have recourse to the courts, as the Arar case proves. Courts and the so-called “justice system” are busy policing individuals. Individuals’ rights are more curtailed and restricted than ever before. But corporate entities are freer than ever before.

In such a lawless neighborhood, what can an individual do? Obvious: Join a gang—any gang. To remain unaffiliated is to be begging to be set upon by members of one gang or another, be it the various gangs that make up the government (TSA, IRS, ICE, Homeland Security, etc.), or the various corporations who have made sure that unaffiliated individuals are fleeced in health care, insurance, financial services, etc. (As an individual, health insurance is prohibitive in the U.S.—but as a corporate cog of a big corporation? That’s another story. How often do we hear of corporate employees kowtowing to their corporate masters in order to hang on to their health-care coverage?)

But what happens to a neighborhood where gangs dominate? Why, that’s quite simple: The neighborhood is destroyed. The gangs don’t disappear, as the neighborhood is slowly ruined. The gangs stay put, feeding off the corpse of the neighborhood, until it's nothing but a husk—kind of like digger wasps.

This is what's happening to the “Free World”—our world. Fun, ain’t it?

BP Oil Spill and Toxic Sludge of Public Education

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Corporate entity becomes ‘candidate’ for congress

Pretty sure this is just a very clever attempt to portray corporations in the proper light politically. If not, then wow...


Corporate entity becomes ‘candidate’, kicks off bid for Congress

By Stephen C. Webster
Saturday, March 13th, 2010 -- 12:14 pm

When the Supreme Court decided the case Citizens United vs. Federal Election Commission, henceforth allowing corporate soft money to influence U.S. elections, Rep. Alan Grayson (D-FL) cynically opined that it would lead to the election of the "congressman from Wal-Mart."

Turns out, he may be right.

Meet Murray Hill, Inc., the first corporation to run for Congress in the United States.

"Until now, corporations only influenced politics with high-paid lobbyists and backroom deals," the company's YouTube account declares. "But today, thanks to an enlightened supreme court, corporations now have all the rights the founding fathers meant for us. That's why Murray Hill Incorporated is taking democracy's next step-- running for Congress."

Murray Hill, Inc. even has a fan page on Facebook, and a campaign ad. Watch:



Hill says it plans to file as a Republican for the GOP primary in Maryland's eighth congressional district, currently represented by Democrat Chris Van Hollen.

Van Hollen, along with Sen. Chuck Schumer (D-NY), introduced legislation in February they hope will help blunt the effect of the court's decision by restoring some of the restrictions on corporate campaign spending. Hill reportedly has "no beef" with Van Hollen, though the position seems more part of the campaign's schtick than anything.

The company, a self-titled "progressive" messaging firm, was launched in 2005 by one Eric Hensal, who used to work with Group360, an advocacy organization in Washington, D.C.

Hill said in a statement that its campaign would put people "second, or even third," according to The Washington Post.

"It's a new day," Hill's ad says. "Until now, corporations influenced politics with high paid lobbyists and backroom deals. However, as much as corporate interests gave to politicians, we could never be absolutely sure they would do our bidding. But today, thanks to an enlightened Supreme Court, corporations now have all the rights the founding fathers meant for us. It's our democracy: we bought it, we paid for it and we're going to keep it."

Hill "wanted to run as a Republican because we feel the Republican Party is more receptive to our basic message that corporations are people, too," campaign manager William Klein told the Post.

When the Supreme Court first decided Citizens United, 41 industry leaders signed a letter to Congress urging the end of what they called corporate "bribery."

"Is there a difference between campaign contributions and bribery?" said Alan Hassenfeld, chairman of Hasbro, Inc, who co-signed the letter. "It is long past the time to stop requiring that our elected officials moonlight as telemarketers raising money for their re-election campaigns rather then devoting all their time to solving the problems before this nation."

A blogger with watchdog group The Sunlight Foundation called the decision the "corporate globalization" of U.S. elections, cautioning that allowing corporate funds in elections would also make way for undue foreign influence on U.S. politics.

"It allows corporations to spend all the money they want to buy and sell elected officials through the campaign process," Rep. Grayson said of the Citizens United case. "It allows them to reward political sellouts, and it allows them to punish elected officials who actually try to do what's right for the people."

The Post adds:

Whether or not a corporation ultimately replaces Van Hollen in Congress, Murray Hill's interest has sparked other speculation among the political chattering class in Maryland.
Why not have an accounting firm run for comptroller, the state's chief tax collector? Why not a law firm for attorney general? The winning firm could arrive in office with a full cadre of associates and save taxpayers money.
It remains to be seen whether the attention generated by Murray Hill's bid will be good for its bottom line.