At the Expense of Domestic Programs, Obama’s Plan to Save the Military From Cuts

Sunday, February 19, 2012 by The Nation
by George Zornick

As budget wonks comb over President Obama’s outline for fiscal year 2013, a startling White House plan has become clear: the administration is seeking to undo some mandatory cuts to the Pentagon at the expense of critical domestic programs. It does so by basically undoing the defense sequester that kicked in as a result of the Congressional super committee on debt. This wasn’t a featured part of the White House budget rollout, and for good reason—it undercuts the administration’s carefully crafted message of benevolent government action and economic fairness.

The process for this shift is complicated, and has been flagged by the Center on Budget and Policy Priorities. Essentially, Obama wants to eliminate individual spending caps for both military and non-military spending, and institute one single discretionary spending cap instead. Here’s the basic rundown.

To understand how deep the retreat really is, one first needs to understand the difference between security spending and defense spending. Spending on defense applies to the “National Defense Function”—that is, the entire Pentagon budget, plus $24 billion for nuclear weaponry and environmental cleanup programs at the Department of Energy, the defense activities of the FBI, and a small handful of other defense programs. Security spending, on the other hand, excludes some of the Department of Energy money, along with some of the other FBI and small program funding—but includes the Department of Veterans Affairs, the Department of Homeland Security and the “International Affairs” part of the budget, which is mainly State Department funding and foreign aid.

So from a progressive point of view, to cut the most fat from the military budget you want defense cuts, not security cuts—otherwise funding for veterans’ health and diplomatic efforts is also in jeopardy.

Next: when the debt ceiling deal passed in August, it implemented discretionary spending caps through 2021. This meant that if Congress appropriated money above certain levels for discretionary spending—which is basically everything the government spends money on, minus entitlement benefits and interest on the debt—something called sequestration kicks in, which entails automatic, across-the-board cuts to bring the budget back under the spending caps.

Under the debt ceiling deal, those spending caps were split between security and nonsecurity spending areas in 2012 and 2013. Nonsecurity spending is the important domestic stuff: everything besides security spending, entitlement benefits and interest on the debt. Think scientific research, the NASA budget, national parks and forests, environmental protection, social services, Head Start and so on. Then, in every year from 2014 through 2021, there would just be one cap. So starting in 2014, Congress could theoretically take everything from nonsecurity spending in order to maintain a healthy security budget and meet the spending cap.

The failure of the super committee changed all this. When the twelve members failed to reach an agreement in November, the budget laws automatically changed—now, there is no single cap starting in 2014, but dual caps in both defense and non-defense spending through 2021. That’s why hawks like Senators Jon Kyl and John McCain were so upset when the super committee failed—with mandatory caps in defense and nondefense spending through 2014, it was a worst-case scenario for defenders of the Pentagon budget.

The Obama budget plan, quite disappointingly, proposes to reverse the configuration of these caps. It would have caps in 2013, split between security and nonsecurity spending—not defense and nondefense—and then beginning in 2014, a single cap is reinstituted anyhow. All the firewalls ensuring that defense spending is reduced would thus be torn down.

The president’s budget for 2013 follows this new scheme: Obama proposes around $5 billion in spending above the defense cap, and $5 billion in spending below the nondefense cap. This would violate the current budget laws—unless the categorization was changed to security and nonsecurity spending. Then it would comply. And every year after, the distinction wouldn’t matter anyhow under one spending cap.

This is a dramatic shift in priorities, and one that not many people are discussing. Given the massive lobbying potential of the defense industry—and the comparably weak advocates for things like Head Start funding—it’s a virtual certainty that, under the White House proposal, these strict spending caps would be met by raiding nonsecurity spending heavily in years to come. Even the president’s own budget does that. One shudders to imagine the budget of President Romney or President Rubio.

A Billionaires' Coup in the US

Friday, September 23, 2011 by The Guardian/UK
The debt deal will hurt the poorest Americans, convinced by Fox and the Tea Party to act against their own welfare

by George Monbiot

There are two ways of cutting a deficit: raising taxes or reducing spending. Raising taxes means taking money from the rich. Cutting spending means taking money from the poor. Not in all cases of course: some taxation is regressive; some state spending takes money from ordinary citizens and gives it to banks, arms companies, oil barons and farmers. But in most cases the state transfers wealth from rich to poor, while tax cuts shift it from poor to rich.

So the rich, in a nominal democracy, have a struggle on their hands. Somehow they must persuade the other 99% to vote against their own interests: to shrink the state, supporting spending cuts rather than tax rises. In the US they appear to be succeeding.

Partly as a result of the Bush tax cuts of 2001, 2003 and 2005 (shamefully extended by Barack Obama), taxation of the wealthy, in Obama's words, "is at its lowest level in half a century". The consequence of such regressive policies is a level of inequality unknown in other developed nations. As the Nobel laureate Joseph Stiglitz points out, in the past 10 years the income of the top 1% has risen by 18%, while that of blue-collar male workers has fallen by 12%.

The deal being thrashed out in Congress as this article goes to press seeks only to cut state spending. As the former Republican senator Alan Simpson says: "The little guy is going to be cremated." That means more economic decline, which means a bigger deficit. It's insane. But how did it happen?

The immediate reason is that Republican members of Congress supported by the Tea Party movement won't budge. But this explains nothing. The Tea Party movement mostly consists of people who have been harmed by tax cuts for the rich and spending cuts for the poor and middle. Why would they mobilise against their own welfare? You can understand what is happening in Washington only if you remember what everyone seems to have forgotten: how this movement began.

On Sunday the Observer claimed that "the Tea Party rose out of anger over the scale of federal spending, and in particular in bailing out the banks". This is what its members claim. It's nonsense.

The movement started with Rick Santelli's call on CNBC for a tea party of city traders to dump securities in Lake Michigan, in protest at Obama's plan to "subsidise the losers". In other words, it was a demand for a financiers' mobilisation against the bailout of their victims: people losing their homes. On the same day, a group called Americans for Prosperity (AFP) set up a Tea Party Facebook page and started organising Tea Party events. The movement, whose programme is still lavishly supported by AFP, took off from there.

So who or what is Americans for Prosperity? It was founded and is funded by Charles and David Koch. They run what they call "the biggest company you've never heard of", and between them they are worth $43bn. Koch Industries is a massive oil, gas, minerals, timber and chemicals company. In the past 15 years the brothers have poured at least $85m into lobby groups arguing for lower taxes for the rich and weaker regulations for industry. The groups and politicians the Kochs fund also lobby to destroy collective bargaining, to stop laws reducing carbon emissions, to stymie healthcare reform and to hobble attempts to control the banks. During the 2010 election cycle, AFP spent $45m supporting its favoured candidates.

But the Kochs' greatest political triumph is the creation of the Tea Party movement. Taki Oldham's film (Astro)Turf Wars shows Tea Party organisers reporting back to David Koch at their 2009 Defending the Dream summit, explaining the events and protests they've started with AFP help. "Five years ago," he tells them, "my brother Charles and I provided the funds to start Americans for Prosperity. It's beyond my wildest dreams how AFP has grown into this enormous organisation."

AFP mobilised the anger of people who found their conditions of life declining, and channelled it into a campaign to make them worse. Tea Party campaigners take to the streets to demand less tax for billionaires and worse health, education and social insurance for themselves.

Are they stupid? No. They have been misled by another instrument of corporate power: the media. The movement has been relentlessly promoted by Fox News, which belongs to a more familiar billionaire. Like the Kochs, Rupert Murdoch aims to misrepresent the democratic choices we face, in order to persuade us to vote against our own interests and in favour of his.

What's taking place in Congress right now is a kind of political coup. A handful of billionaires have shoved a spanner into the legislative process. Through the candidates they have bought and the movement that supports them, they are now breaking and reshaping the system to serve their interests. We knew this once, but now we've forgotten. What hope do we have of resisting a force we won't even see?

The Not-So-Super Committee

Those Automatic Defense Cuts Aren't Going to Happen

by WINSLOW T. WHEELER

 

Touted as the “Super Committee” by pundits, the Joint Deficit Reduction Committee-created by the August 2 Debt Deal between President Barack Obama and the congressional Republicans-has turned out to be not so super.  The real super committees of Congress, the appropriations committees, are reasserting their control, and they are doing it with the defense budget, keeping it quite flush with money and unraveling a second round of debt reduction. 

Painful as it is to remember, the August Debt Deal-which got the country past the crisis provoked by the Republican’s refusal to allow an increase in the debt ceiling-requires the so-called Super Committee to find at least $1.2 trillion in budget cuts over the next ten years.  If the 12 congressional Republicans and Democrats on the committee fail to agree on those cuts, automatic reductions are supposed to take place: including $492 billion in the defense budget and over $400 billion elsewhere, according to the Congressional Budget Office (at http://www.cbo.gov/doc.cfm?index=124140).  Either, the Super Committee will cut a deal, or the defense budget gets whacked. 

It is not going to happen that way.  

First, the Super Committee is bound to fail; it will reach no meaningful budget agreement. 

Second, when the committee fails, the defense cuts envisioned by the supposedly automatic trigger mechanism will not occur.  That will be for the simple reason that almost no one wants that to happen.  While they are quite mistaken about the consequences, almost everyone on Capitol Hill (and in the Pentagon) think that those defense reductions will be “devastating,” “disastrous,” “doomsday,” and any other Apocalyptic term you can think of.  In short, the Debt Deal took a hostage that no one wants to shoot.  

In the 31 years I worked on Capitol Hill, I came to know several others with as much, or more, experience as I in understanding how the place operates.  Not one of the Hill veterans I have heard from believes the Debt Deal and the Super Committee are headed for anything but failure.  The Deal and the Committee were designed only to kick the can down the road to get us past last summer’s crisis-with the inevitable result of provoking others. 

The meetings held thus far by the Super Committee have made obvious its inevitable breakdown.  Hearing this week with from the Director of the Congressional Budget Office, Douglas Elmendorf (who conducted himself with professionalism and grace), the congressional members demonstrated precisely why the vast majority of Americans hold them in contempt.    

The committee started out by insisting that it hear not from Elmendorf but from itself.  The national audience was dragged through more than an hour of supremely self-involved Republicans and Democrats explain how the other side caused everything and their own prescriptions were the only pill to take.  When Elmendorf tried to provide a framework for addressing the issues, they simply repeated themselves. 

Consisting mostly of second stringers on budget issues and leadership errand boys (and a female) from their party caucuses, that bunch will find a $1.2 trillion budget solution sometime after pigs fly and shrimps whistle.

Meanwhile, behind closed doors, the real budget action on Capitol Hill was occurring.  The Defense Subcommittee of the Senate Appropriations Committee met on Tuesday, in private, to decide on the 2012 Department of Defense Appropriations bill. It funds most, but not all, of the Pentagon’s budget.  The Subcommittee took cognizance of one of the provisions of the Debt Deal, but not any parts that had to do with the Supercommittee and the automatic cuts. 

In addition to the Super Committee and the trigger mechanism, the Debt Deal imposed-without any further palaver required-an initial phase of reductions on appropriations for the next ten years totaling over $900 billion.  While the precise budget obligation on the Pentagon in this first phase has not been entirely clear, most are now interpreting it to mean a $350 billion reduction.  In effect, that means that the Pentagon budget would be frozen at its current, fiscal year 2011 level-precisely the level set by the Appropriations Committee’s bill. 

It safely can be predicted this will be the level of Pentagon spending the entire Congress endorses for 20012, after theatrical grumbling by some Republicans about the bill’s spending being $26 billion less than Obama’s now meaningless budget request from last February.    

Even at the 2011 level, the bill is extremely generous.  The amount-about $529 billion after separate Military Construction and some other pieces are added-will be almost as much “base” spending that the Pentagon has seen in any single year for decades.  If you add the separate funding for the wars in Afghanistan and elsewhere ($118 billion), the amount is quite close to the Pentagon’s highest ever level since the end of World War Two-and it is well above previous secondary peaks attained in the Korean and Vietnamese Wars and Ronald Reagan’s fleeting zenith in 1985. 

That “frozen” 2011 level will be also more than twice the defense budgets of China, Russia, Iran, Syria, Cuba, and Somalia-combined.  It will be more than $80 billion more than we spent, on average, during the Cold War when we faced a threatening and heavily armed Soviet Union and a hostile, dogmatically communist China. 
 
While the new DOD appropriations bill was described by its architect, Senator Daniel Inouye (D-HI) as “not an easy allocation to meet” (committee press release is at http://appropriations.senate.gov/news.cfm?method=news.view&id=33ad4f56-b0fc-45f8-8c5b-162b5eab4791), it is actually a defense budget quite flush with money.

Moreover, the bill has several gimmicks to permit higher spending than is apparent.  It includes a clumsy ploy of moving $6.5 billion out of the capped part of the Pentagon budget that the Debt Deal limited and adding the money back into the separate (un-capped) funding for the war in Afghanistan.  (This, of course, permitted the “base” bill to contain $6.5 billion more than otherwise.)   Also, as the details trickle out next week, we will find the usual ruses, including cuts for “revised economic assumptions,” “unobligated balances” and other phony games to pretend the Committee is reducing money (rather than deferring it) and making good government decisions (rather than taking capricious cuts in military readiness while protecting procurement-and contractors). (For a previous discussion of some of these tricks, see http://www.cdi.org/friendlyversion/printversion.cfm?documentID=4673.) 

The bill is not a tough minded but moderate action to impose restraint on the Pentagon; it is an effort to protect Pentagon spending as much as possible.  With Robert Gates taking the lead and Leon Panetta bobble-heading in agreement, the Pentagon has resolved itself to that first phase of $350 billion in cuts over ten years.  They are not happy about it, but they will live with it in order to fend off further reductions.  The Senate Appropriations Committee leadership is in deep sympathy with that sentiment.  

Filled with bunkum to seem to be cutting at least moderately but actually rescuing unaffordable, underperforming flotsam like the F-35 Joint Strike Fighter, the bill from the Senate Appropriations Committee is a rear guard budget protection action.  

The gambit will be successful.  The defenders of big defense spending have been extremely vocal. The Chairman of the House Armed Services Committee, Congressman Buck McKeon (R-CA), is quoted almost every day about the cataclysm to occur if the defense budget is cut at all.  This kind of hysteria makes the assertions of Senator John Kyl (R-CO) almost seem to be the middle ground: he threatened to quit the Supercommittee if the DOD cuts go beyond the initial $350 billion. The response from Democrats and even Republicans who have previously favored more meaningful Pentagon cuts has sealed the deal: they have been completely silent. 

All that remains to be done is to let the Supercommittee proceed on its clear path to failure.  That will trigger the dreaded automatic cuts, but only nominally.  As designed, those cuts would not occur until 2013.  The big defense spender types will have all of 2012 to trash any opponents who dare to speak in favor of allowing them.  They will use their traditional slander that to be against bloat in the defense budget is to be “anti-defense.”  It has always worked in the past, especially with Democrats who want to posture themselves as moderate, such as candidate Obama. 

The Debt Deal will be rewritten; the defense budget will be “saved,” and the next budget crisis will be made both inevitable and worse. We have a lot more dysfunction in Congress and the White House yet to observe.

Executive Pay and the Great Tax Dodge

Thursday, September 1, 2011 by The Nation

by Katrina vanden Heuvel

 

Before the deficit reduction “super-committee” embarks on a $1–2 trillion course of human slashonomics, it should take a hard look at the Institute for Policy Studies’ (IPS) eighteenth annual executive compensation report, which details how corporations are rewarding CEOs for aggressive tax avoidance—to the tune of at least $100 billion in lost tax revenues every year.

Executive Excess 2011: The Massive CEO Rewards for Tax Dodging reveals that last year twenty-five of the 100 most highly paid CEOs took home salaries greater than the amount their companies paid in 2010 federal income taxes. And it wasn’t because the corporations weren’t making dough—they averaged global profits of $1.9 billion, and only seven reported losses in US pre-tax income.

But these twenty-five companies shielded their profits in 556 tax haven subsidiaries in places like the Cayman Islands, Isle of Man, and Singapore, which proved to be a lucrative tax dodging strategy for the CEOs themselves: the twenty-five CEOs averaged $16.7 million in compensation, compared to $10.8 million for their peers in the S&P 500.

“What we’re seeing here is tax dodging, pure and simple,” says Sarah Anderson, who directs the global economy project at IPS and has coauthored the Executive Excess report for eighteen years running. “And tax dodging that’s benefiting the CEOs of these companies personally.”

It’s not that the corporations are breaking the law. Indeed, the report co-authors emphasize that tax dodging isn’t illegal. But Anderson points out that the laws are “the result of a corrupt system where hundreds of millions of dollars spent lobbying can result in these kinds of crazy, corporate tax loopholes.”

That’s why twenty of the twenty-five companies who paid their CEOs more than they paid in federal income taxes also spent more on lobbying lawmakers, and eighteen contributed more to the political campaigns of their preferred candidates than they paid to the IRS.

“GE is sort of our world champion when it comes to tax dodging," says Anderson. “They were also number one in lobbying and political campaign spending, with about $42 million spent on that last year.”

GE paid CEO Jeff Immelt—who also is chairman of President Obama’s Council on Jobs and Competitiveness—$15.2 million. The company had more than $5 billion in US profits, yet reaped $3.3 billion in federal income tax refunds. (You should be receiving your thank-you note in the mail any day now.)

Report co-author Chuck Collins, who directs the IPS program on inequality and the common good, notes that the offshore tax havens have created a “two-tier” corporate system in which domestic businesses that pay closer to the 35 percent statutory rate are competing against global businesses that game the system.
“This is really bad for business and bad for local domestic businesses in particular,” says Collins.

IPS is working with business allies to close loopholes, broaden the tax base  and reduce rates, creating a fairer system. Collins also points out that the common conservative argument that US companies pay one of the highest tax rates in the world at 35 percent is a canard. In fact, thanks to all the gimmicks courtesy of corporate lobbyists and an obliging Congress, the effective rate was 25 percent in 1988 and has plummeted to 10.5 percent today—among the lowest in the world.

“Two generations ago some of the CEOs of these very same companies would have been embarrassed to be so lavishly compensated while at the same time reneging on their responsibility to pay their fair share in taxes,” says Collins. “It’s not just a trend in terms of compensation and tax avoidance. We’re looking at a multigenerational ethical shift away from a civic and corporate leadership.”

The Stop Tax Haven Abuse Act sponsored by Senator Carl Levin and Congressman Lloyd Doggett would plug up some of the corporate-preferred offshore mechanisms and secrecy jurisdictions. IPS has a petition in support of the legislation, and members of Congress should also be contacted and urged to cosponsor. The voices of small-business owners in particular are an important counter to corporations that claim they need these tax havens to create jobs.

The report also illustrates that exorbitant CEO salaries—fueled in part by these tax avoidance schemes—have led to a dramatic increase in the gap between CEO and average worker pay: it was 263:1 in 2009, and shot up to 325:1 last year. Anderson notes that the ratio was just around 40:1 in the 1980s.

“It’s clearly not due to some huge increase of talent at the top—some kind of managerial brilliance,” she says. “Instead it’s the result of a perverse system where CEOs are outrageously rewarded for short-term thinking: tax dodging, reckless investments, slashing jobs, cooking the books or using accounting tricks. Meanwhile, board members approving the pay packages are often executives at other companies who don’t want to rock the boat, or who find the rising compensation mutually beneficial.”

Fortunately, as a result of the Dodd-Frank bill, shareholders now have a right to an annual (though non-binding) “say-on-pay” vote on executive compensation packages, and Anderson says about forty have been rejected.

“This is a growing area of activism,” says Anderson. “But we can’t just leave it to shareholders to solve all the problems.”

Other key proposals that need citizen-activists’ support include California Congresswoman Barbara Lee’s Income Equity Act that would deny corporate tax deductions on any executive pay that runs over twenty-five times the lowest-paid employee, or $500,000, whichever is higher.

There is also a need for citizens to get involved in an underreported fight over the Dodd-Frank requirement that corporations disclose the gap between its CEO and median worker’s pay. The potential for public backlash has led corporate lobbyists to make repeal a priority before the disclosure takes effect. The House will likely vote to repeal, and there is concern that conservative Democrats in the Senate will see it as a bone to throw to Big Business contributors heading into the 2012 elections.

Already, this report has had a positive impact: it led Maryland Democratic Congressman Elijah Cummings to call for hearings “to examine the extent to which the problems in CEO compensation that led to the economic crisis continue to exist today” and “the extent to which our tax code may be encouraging these growing disparities.”

Executive Excess has also received coverage from the Washington Post, the New York Times, Reuters, MSNBC, the Atlanta Journal Constitution and Bloomberg, among others—and that’s just on the first day of its release.

IPS has done a real service in drawing these connections between CEO pay and an absurdly unfair tax system. It’s time for street heat, letters to the editor, calls to Congress, and driving this issue into 2012. It’s time to restore some sanity to pay equity and corporate taxes.

George W. Obama? The Bush-Obama Presidency

The Saved and the Sacked
By DAVID BROMWICH

Is it too soon to speak of the Bush-Obama presidency?

The record shows impressive continuities between the two administrations, and nowhere more than in the policy of "force projection" in the Arab world. With one war half-ended in Iraq, but another doubled in size and stretching across borders in Afghanistan; with an expanded program of drone killings and black-ops assassinations, the latter glorified in special ceremonies of thanksgiving (as they never were under Bush); with the number of prisoners at Guantanamo having decreased, but some now slated for permanent detention; with the repeated invocation of "state secrets" to protect the government from charges of war crimes; with the Patriot Act renewed and its most dubious provisions left intact -- the Bush-Obama presidency has sufficient self-coherence to be considered a historical entity with a life of its own.

The significance of this development has been veiled in recent mainstream coverage of the national security state and our larger and smaller wars. Back in 2005-2006, when the Iraqi insurgency refused to die down and what had been presented as "sectarian feuding" began to look like a war of national liberation against an occupying power, the American press exhibited an uncommon critical acuteness. But Washington's embrace of "the surge" in Iraq in 2007 took that war off the front page, and it -- along with the Afghan War -- has returned only occasionally in the four years since.

This disappearance suited the purposes of the long double-presidency. Keep the wars going but normalize them; make them normal by not talking about them much; by not talking about them imply that, while "victory" is not in sight, there is something else, an achievement more realistic and perhaps more grown-up, still available to the United States in the Greater Middle East. This other thing is never defined but has lately been given a name. They call it "success."

Meanwhile, back at home...

The usual turn from unsatisfying wars abroad to happier domestic conditions, however, no longer seems tenable. In these August days, Americans are rubbing their eyes, still wondering what has befallen us with the president's "debt deal" -- a shifting of tectonic plates beneath the economy of a sort Dick Cheney might have dreamed of, but which Barack Obama and the House Republicans together brought to fruition. A redistribution of wealth and power more than three decades in the making has now been carved into the system and given the stamp of permanence.

Only a Democratic president, and only one associated in the public mind (however wrongly) with the fortunes of the poor, could have accomplished such a reversal with such sickening completeness.

One of the last good times that President Obama enjoyed before the frenzy of debt negotiations began was a chuckle he shared with Jeff Immelt, former CEO of General Electric and now head of the president's outside panel of economic advisers. At a June 13th meeting of the president's Council on Jobs and Competitiveness, a questioner said he assumed that President Obama knew about the difficulties caused by the drawn-out process of securing permits for construction jobs. Obama leaned into the microphone and offered a breezy ad-lib: "Shovel ready wasn't as, uh, shovel-ready as we expected" -- and Immelt got off a hearty laugh. An unguarded moment: the president of "hope and change" signifying his solidarity with the big managers whose worldly irony he had adopted.

A certain mystery surrounds Obama's perpetuation of Bush's economic policies, in the absence of the reactionary class loyalty that accompanied them, and his expansion of Bush's war policies in the absence of the crude idea of the enemy and the spirited love of war that drove Bush. But the puzzle has grown tiresome, and the effects of the continuity matter more than its sources.

We knew the meaning of Bush, and the need for resistance was clear. Obama makes resistance harder. During a deep crisis, such a nominal leader, by his contradictory words and conduct and the force of his example (or rather the lack of force in his example), becomes a subtle disaster for all those whose hopes once rested with him.

The philosopher William James took as a motto for practical morality: "By their fruits shall ye know them, not by their roots."

Suppose we test the last two and a half years by the same sensible criterion. Translated into the language of presidential power -- the power of a president whose method was to field a "team of rivals" and "lead from behind" -- the motto must mean: by their appointments shall ye know them.

Let us examine Obama, then, by the standard of his cabinet members, advisers, and favored influences, and group them by the answers to two questions: Whom has he wanted to stay on longest, in order to profit from their solidity and bask in their influence? Which of them has he discarded fastest or been most eager to shed his association with? Think of them as the saved and the sacked. Obama's taste in associates at these extremes may tell us something about the moral and political personality in the middle.

The Saved

Advisers whom the president entrusted with power beyond expectation, and sought to keep in his administration for as long as he could prevail on them to stay:

1. Lawrence Summers: Obama's chief economic adviser, 2009-2010. As Bill Clinton's secretary of the treasury, 1999-2001, Summers arranged the repeal of the New Deal-era Glass-Steagall Act, which had separated the commercial banks -- holders of the savings of ordinary people -- from the speculative action of the brokerage houses and money firms. The aim of Glass-Steagall was to protect citizens and the economy from a financial bubble and collapse. Demolition of that wall between savings and finance was a large cause of the 2008 meltdown. In the late 1990s, Summers had also pressed for the deregulation of complex derivatives -- a dream fully realized under Bush. In the first years of the Obama era, with the ear of the president, he commandeered the bank bailouts and advised against major programs for job creation. He won, and we are living with the results.

In 2009-2010, the critical accessory to Summers's power was Timothy Geithner, Obama's treasury secretary. Most likely, Geithner was picked for his position by the combined recommendations of Summers and Bush's Treasury Secretary Hank Paulson. The latter once described Geithner as "a very unusually talented young man," and worked with him closely in 2008 when he was still president of the New York Fed. At that time, he concurred with Paulson on the wisdom of bailing out the insurance giant AIG and not rescuing Lehman Brothers. Obama for his part initiated several phone consultations with Paulson during the 2008 campaign -- often holding his plane on the tarmac to talk and listen. This chain is unbroken. Any tremors in the president's closed world caused by Summers's early departure from the administration have undoubtedly been offset by Geithner's recent reassurance that he will stay at the Treasury beyond 2011.

Postscript: In 2011, Summers has become more reformist than Obama. On The Charlie Rose Show on July 13th, he criticized the president's dilatoriness in mounting a program to create jobs. Thus he urged the partial abandonment of his own policy, which Obama continues to defend.

2. Robert Gates: A member of the permanent establishment in Washington, Gates raised to the third power the distinction of massive continuity: First as CIA director under George H.W. Bush, second as secretary of defense under George W. Bush, and third as Obama's secretary of defense. He remained for 28 months and departed against the wishes of the president. Gates sided with General David Petraeus and Chairman of the Joint Chiefs of Staff Admiral Mike Mullen in 2009 to promote a massive (called "moderate") escalation of the Afghan War; yet he did so without rancor or posturing -- a style Obama trusted and in the company of which he did not mind losing. In the Bush years, Gates was certainly a moderate in relation to the extravagant war aims of Vice President Dick Cheney, Secretary of Defense Donald Rumsfeld, and their neoconservative circle. He worked to strengthen U.S. militarism through an ethic of bureaucratic normalization.

His approach has been endorsed and will be continued -- though probably with less canniness -- by his successor Leon Panetta. Without a career in security to fortify his confidence, Panetta is really a member of a different species: the adaptable choice for "running things" -- without regard to the nature of the thing or the competence required. Best known as the chief of staff who reduced to a semblance of order the confusion of the Clinton White House, he is associated in the public mind with no set of views or policies.

3. Rahm Emanuel: As Obama's White House chief of staff, Emanuel performed much of the hands-on work of legislative bargaining that President Obama himself preferred not to engage in. (Vice President Joe Biden also regularly took on this role.) He thereby incurred a cheerless gratitude, but he is a man willing to be disliked. Obama seems to have held Emanuel's ability in awe; and such was his power that nothing but the chance of becoming mayor of Chicago would have plucked him from the White House. Emanuel is credited, rightly or not, with the Democratic congressional victory of 2006, and one fact about that success, which was never hidden, has been too quickly forgotten. Rahm Emanuel took pains to weed out anti-war candidates.

Obama would have known this, and admired the man who carried it off. Whether Emanuel pursued a similar strategy in the 2010 midterm elections has never been seriously discussed. The fact that the category "anti-war Democrat" hardly exists in 2011 is, however, an achievement jointly creditable to Emanuel and the president.

4. Cass Sunstein: Widely thought to be the president's most powerful legal adviser. Sunstein defended and may have advised Obama on his breach of his 2008 promise (as senator) to filibuster any new law that awarded amnesty to the telecoms that illegally spied on Americans. This was Obama's first major reversal in the 2008 presidential campaign: he had previously defended the integrity of the Foreign Surveillance Intelligence Act against the secret encroachment of the National Security Agency (NSA).

At that moment, Obama changed from an accuser to a conditional apologist for the surveillance of Americans: the secret policy advocated by Dick Cheney, approved by President Bush, executed by NSA Director Michael Hayden, and supplied with a rationale by Cheney's legal counsel David Addington. In his awkward public defense of the switch, Obama suggested that scrutiny of telecom records and their uses by the inspectors general in the relevant agencies and departments should be enough to restore the rule of law.

When it comes to national security policy, Sunstein is a particularly strong example of Bush-Obama continuity. Though sometimes identified as a liberal, from early on he defended the expansion of the national security state under Cheney's Office of the Vice President, and he praised the firm restraint with which the Ashcroft Justice Department shouldered its responsibilities. "By historical standards," he wrote in the fall of 2004, "the Bush administration has acted with considerable restraint and with commendable respect for political liberty. It has not attempted to restrict speech or the democratic process in any way. The much-reviled and poorly understood Patriot Act, at least as administered, has done little to restrict civil liberty as it stood before its enactment." This seems to have become Obama's view.

Charity toward the framers of the Patriot Act has, in the Obama administration, been accompanied by a consistent refusal to initiate or support legal action against the "torture lawyers." Sunstein described the Bush Justice Department memos by John Yoo and Jay Bybee, which defended the use of the water torture and other extreme methods, in words that stopped short of legal condemnation: "It's egregiously bad. It's very low level, it's very weak, embarrassingly weak, just short of reckless." Bad lawyering: a professional fault but not an actionable offense.

The Obama policy of declining to hold any high official or even CIA interrogators accountable for violations of the law by the preceding administration would likely not have survived opposition by Sunstein. A promise not to prosecute, however, has been implicit in the findings by the Obama Justice Department -- a promise that was made explicit by Leon Panetta in February 2009 when he had just been named President Obama's new director of the CIA.

As head of the president's Office of Information and Regulatory Affairs, with an office in the White House, Sunstein adjudicates government policy on issues of worker and consumer safety; yet his title suggests a claim of authority on issues such as the data-mining of information about American citizens and the government's deployment of a state secrets privilege. He deserves wider attention, too, for his 2008 proposal that the government "cognitively infiltrate" discussion groups on-line and in neighborhoods, paying covert agents to monitor and, if possible, discredit lines of argument which the government judges to be extreme or misleading.

5. Eric Holder: Holder once said that the trial of suspected 9/11 "mastermind" Khalid Sheikh Mohammed in a New York City courtroom would be "the defining event of my time as attorney general." The decision to make KSM's a civilian trial was, however, scuttled, thanks to incompetent management at the White House: neither the first nor last failure of its kind. The policy of trying suspected terrorists in civilian courts seems to have suffered from never being wholeheartedly embraced by the administration's inside actors. Local resistance by the New York authorities was the ostensible reason for the failure and the change of venue back to a military tribunal at Guantanamo. No member of the administration besides Holder has been observed to show much regret.

During his 30-month tenure, in keeping with Obama's willingness to overlook the unpleasant history of CIA renditions and "extreme interrogations," Holder has made no move to prosecute any upper-level official of any of the big banks and money firms responsible for the financial collapse of 2008. His silence on the subject has been taken as a signal that such prosecutions will never occur. To judge by public statements, the energies of the attorney general, in an administration that arrived under the banner of bringing "sunshine" and "transparency" to Washington, have mainly been dedicated to the prosecution of government whistle-blowers through a uniquely rigorous application of the Espionage Act of 1917. More people have been accused under that law by this attorney general than in the entire preceding 93 years of the law's existence.

Again, this is a focus that Bush-era attorney generals John Ashcroft, Alberto Gonzales, and Michael Mukasey might have relished, but on which none would have dared to act on so boldly. Extraordinary delays in grand jury proceedings on Army Private Bradley Manning, suspected of providing government secrets to WikiLeaks, and Julian Assange, who ran that website, are said to have come from a protracted attempt to secure a legal hold against one or both potential defendants within the limits of a barbarous and almost dormant law.

6. Dennis Ross: Earlier in his career, Obama seems to have cherished an interest in the creation of an independent Palestinian state. In Chicago, he was a friend of the dissident Middle East scholar Rashid Khalidi; during his 2007 primary campaign, he sought and received advice from Robert Malley, former special assistant to President Clinton for Arab-Israeli affairs, and Zbigniew Brzezinski, former national security adviser to President Jimmy Carter. Both were "realist" opponents of the expansionist policy of Israel's right-wing coalition government, which subsidizes and affords military protection to Jewish settlements on the occupied West Bank.

Under pressure from the Israel lobby, however, Obama dissociated himself from all three chosen advisers.

Ross, as surely as Gates, is a member of Washington's permanent establishment. Recruited for the Carter Defense Department by Paul Wolfowitz, he started out as a Soviet specialist, but his expertise migrated with a commission to undertake a Limited Contingency Study on the need for American defense of the Persian Gulf. An American negotiator at the 2000 Camp David summit, Ross was accused of being an unfair broker, having always "started from the Israeli bottom line."

He entered the Obama administration as a special adviser to Hillary Clinton on the Persian Gulf, but was moved into the White House on June 25, 2009, and outfitted with an elaborate title and comprehensive duties: Special Assistant to the President and Senior Director for the Central Region, including all of the Middle East and the Persian Gulf, Afghanistan, Pakistan and South Asia. Ross has cautioned Obama to be "sensitive" to domestic Israeli concerns.

In retrospect, his installation in the White House looks like the first step in a pattern of concessions to Israeli Prime Minister Benjamin Netanyahu that undid Obama's hopes for an agreement in the region. Here, caution precluded all inventiveness. It could have been predicted that the ascendancy of Ross would render void the two-state solution Obama anticipated in his carefully prepared and broadly advertised speech to the Arab world from Cairo University in June 2009.

7. Peter Orzag: Director of the Office of Management and Budget from January 2009 to August 2010, Orzag was charged with bringing in the big health insurers to lay out what it would take for them to support the president's health-care law. In this way, Orzag -- along with the companies -- exerted a decisive influence on the final shape of the Patient Protection and Affordable Care Act of 2010. In January 2011, he left the administration to become vice chairman of global banking at Citigroup. A few days out of the White House, he published an op-ed in the New York Times advising the president to extend the Bush-era tax cuts for the top 2% of Americans -- adding that Obama should indicate that the cuts would continue in force only through 2012. Obama took the advice.

8. Thomas Donilon: National Security Adviser and (after the departure of Gates) Obama's closest consultant on foreign policy. Donilon supported the 34,000 troop-escalation order that followed the president's inconclusive 2009 Afghanistan War review. He encouraged and warmly applauded Obama's non-binding "final orders" on Afghanistan, which all the participants in the 2009 review were asked formally to approve. (The final orders speak of "a prioritized comprehensive approach" by which the U.S. will "work with [Afghan President Hamid] Karzai when we can" to set "the conditions for an accelerated transition," to bring about "effective sub-national governance," and to "transfer" the responsibility for fighting the war while continuing to "degrade" enemy forces.)

Donilon comes from the worlds of business, the law, and government in about equal measure: a versatile career spanning many orthodoxies. His open and unreserved admiration for President Obama seems to have counted more heavily in his appointment than the low opinion of his qualifications apparently held by several associates. As Assistant Secretary of State for Public Affairs during the Clinton administration, he helped arrange the eastward expansion of NATO after the Cold War: perhaps the most pointless and destructive bipartisan project of the epoch. He was Executive Vice President for Law and Policy at Fannie Mae, 1999-2005.

The Sacked

Advisers and nominees with views that were in line with Obama's 2008 election campaign or his professed goals in 2009, but who have since been fired, asked to resign or step down, or seen their nominations dropped:

1. General James Jones: Former Marine Corps Commandant and a skeptic of the Afghanistan escalation, Jones became the president's first National Security Adviser. He was, however, often denied meetings with Obama, who seems to have looked on Gates as a superior technocrat, Petraeus as a more prestigious officer, and Donilon as a more fervent believer in the split-the-difference war and diplomatic policies Obama elected to pursue. Jones resigned in October 2010, under pressure.

A curious point: Obama had spoken to Jones only twice before appointing him to so high a post and seems hardly to have come to know him by the time he resigned.

2. Karl Eikenberry: Commander of Combined Forces in Afghanistan before he was made ambassador, Eikenberry, a retired Lieutenant General, had seniority over both Petraeus and then war commander General Stanley McChrystal when it came to experience in that country and theater of war. He was the author of cables to the State Department in late 2009, which carried a stinging rebuke to the conduct of the war and unconcealed hostility toward any new policy of escalation. The Eikenberry cables were drafted in order to influence the White House review that fall; they advised that the Afghan war was in the process of being lost, that it could never be won, and that nothing good would come from an increased commitment of U.S. troops.

Petraeus, then Centcom commander, and McChrystal were both disturbed by the cables -- startled when they arrived unbidden and intimidated by their authority. Obama, astonishingly, chose to ignore them. This may be the single most baffling occasion of the many when fate dealt a winning card to the president and yet he folded. Among other such occasions: the 2008-2009 bank bailouts and the opening for financial regulation; the BP oil spill in the Gulf of Mexico and the opportunity for a revised environmental policy; the Fukushima nuclear plant meltdowns and a revised policy toward nuclear energy; the Goldstone Report and the chance for an end to the Gaza blockade. But of all these as well as other cases that might be mentioned, the Eikenberry cables offer the clearest instance of persisting in a discredited policy against the weight of impressive evidence.

Ambassador Eikenberry retired in 2011, and Obama replaced him with Ryan Crocker, the Foreign Service officer brought into Iraq by Bush to help General Petraeus manage the details and publicity around the Iraq surge of 2007-2008.

3. Paul Volcker: Head of the Federal Reserve under Presidents Carter and Reagan, Volker had a record (not necessarily common among upper-echelon workers in finance) entirely free of the reproach of venality. A steady adviser to the 2008 Obama campaign, he lent gravity to the young candidate's professions of competence in financial matters. He also counseled Obama against the one-sidedness of a recovery policy founded on repayment guarantees to financial outfits such as Citigroup and Bank of America: the policy, that is, favored by Summers and Geithner in preference to massive job creation and a major investment in infrastructure. "If you want to be a bank," he said, "follow the bank rules. If Goldman Sachs and the others want to do proprietary trading, then they shouldn't be banks." His advice -- to tighten regulation in order to curb speculative trading -- was adopted late and in diluted form. In January 2010, Jeff Immelt, CEO of General Electric, which paid no federal taxes that year, replaced him.

4. Dennis Blair: As Director of National Intelligence, Blair sought to limit the expansion of covert operations by the CIA. In this quest he was defeated by CIA Director Leon Panetta -- a seasoned infighter, though without any experience in intelligence, who successfully enlarged the Agency's prerogatives and limited oversight of its activities during his tenure. Blair refused to resign when Obama asked him to, and demanded to be fired. He finally stepped down on May 21, 2010.

Doubtless Blair hurt his prospects irreparably by making clear to the president his skepticism regarding the usefulness of drone warfare: a form of killing Obama favors as the most politic and antiseptic available to the U.S. Since being sacked, Blair has come out publicly against the broad use of drones in Pakistan and elsewhere.

On his way out, he was retrospectively made a scapegoat for the November 2009 Fort Hood, Texas, killing spree by Army psychiatrist Major Nidal Hasan; for the "underwear" bomber's attempt to blow up a plane on its way to Detroit on Christmas day 2009; and for the failed Times Square car bombing of May 2010 -- all attacks (it was implied) that Blair should have found the missing key to avert, even though the Army, the FBI, and the CIA were unable to do so.

5. James Cartwright: As vice-chairman of the Joint Chiefs of Staff, General Cartwright passed on to Obama, and interpreted for him, a good deal of information that proved useful in the Afghanistan War review. Their friendship outlasted the process and he came to be known as Obama's "favorite general," but Cartwright stirred the resentment from both Petraeus and Mullen for establishing a separate channel of influence with the president. Like Eikenberry, he had been a skeptic on the question of further escalation in Afghanistan. His name was floated by the White House as the front-runner to become chairman of the Joint Chiefs after the retirement of Mullen. Informed of the military opposition to the appointment, Obama reversed field and chose Army Chief of Staff General Martin Dempsey, a figure more agreeable to Petraeus and Mullen.

6. Dawn Johnsen: Obama's first choice to head the Office of Legal Council, a choice generally praised and closely watched by constitutional lawyers and civil libertarians. Her name was withdrawn after a 14-month wait, and she was denied a confirmation process. The cause: Republican objections to her writings and her public statements against the practice of torture and legal justifications for torture.

This reversal falls in with a larger pattern: the putting forward of candidates for government positions whose views are straightforward, publicly available, and consistent with the pre-2009 principles of Barack Obama -- followed by Obama's withdrawal of support for the same candidates. A more recent instance was the naming (after considerable delay) of Elizabeth Warren as a special advisor to organize the Consumer Financial Protection Bureau, followed by the decision in July not to nominate her as the first director of the bureau.

Avoidance of a drag-out fight in confirmation hearings repeatedly seems to be the recurrent motive here. Of course, the advantage of such a fight, given an articulate and willing nominee, is the education of public opinion. But in every possible instance, President Obama has been averse to any public engagement in the clash of ideas. "Bottom line is that it was going to be close," a Senate Democratic source told ABC's Jake Tapper when Johnsen's name was withdrawn. "If they wanted to, the White House could have pushed for a vote. But they didn't want to 'cause they didn't have the stomach for the debate."

Where the nomination of an "extreme" candidate might have hardened the impression of Obama as an extremist, might not a public hearing have helped eradicate the very preconception that a frightened withdrawal tends to confirm? This question is not asked.

7. Greg Craig: For two years special counsel in the Clinton White House, he led the team defending the president in the impeachment proceedings in Congress. Craig's declaration of support for Obama in March 2007 was vital to the insurgent candidate, because of his well-known loyalty to the Clintons. Obama made him White House Counsel, and his initial task was to draw up plans for the closing of Guantanamo, a promise made by the president on his first day in the Oval Office. But once the paper was signed, Obama showed little interest in the developing plans. Others were more passionate. Dick Cheney worked on a susceptible populace to resurrect old fears. The forces against closure rallied and spread panic, while the president said nothing. Craig was defeated inside the White House by the "realist" Rahm Emanuel, and sacked.

8. Carol Browner: A leading environmentalist in the Clinton administration, Browner was given a second shot by Obama as director of the White House Office of Energy and Climate Change Policy. She found her efforts thwarted within the administration as well as in Congress: in mid-2010 Obama decided that -- as a way to deal with global warming -- cap-and-trade legislation was a loser for the midterm elections. Pressure on Obama from the U.S. Chamber of Commerce to heed business interests served as a strong incitement in forcing Browner's resignation after the democratic "shellacking" in midterm elections, a result that his quiet abandonment of cap-and-trade had failed to prevent. The White House had no backup plan for addressing the disaster of global warming. After Browner's resignation in March 2011, her position was abolished. Since then, Obama has seldom spoken of global warming or climate change.

Moral and Political Limbo

The Obama presidency has been characterized by a refined sense of impossibility. A kind of suffocation sets in when a man of power floats carefully clear of all unorthodox stimuli and resorts to official comforters of the sort exemplified by Panetta. As the above partial list of the saved and the sacked shows, the president lives now in a world in which he is certain never to be told he is wrong when he happens to be on the wrong track. It is a world where the unconventionality of an opinion, or the existence of a possible majority against it somewhere, counts as prima facie evidence against its soundness.

So alternative ideas vanish -- along with the people who represent them. What, then, does President Obama imagine he is doing as he backs into one weak appointment after another, and purges all signs of thought and independence around him? We have a few dim clues.

A popular book on Abraham Lincoln, Team of Rivals, seems to have prompted Obama to suppose that Lincoln himself "led from behind" and was committed to bipartisanship not only as a tactic but as an always necessary means to the highest good of democracy. A more wishful conceit was never conceived; but Obama has talked of the book easily and often to support a "pragmatic" instinct for constant compromise that he believes himself to share with the American people and with Lincoln.

A larger hint may come from Obama's recently released National Strategy for Counterterrorism, where a sentence in the president's own voice asserts: "We face the world as it is, but we will also pursue a strategy for the world we seek." If the words "I face the world as it is" have a familiar sound, the reason is that they received a trial run in Obama's 2009 Nobel Prize speech. Those words were the bridge across which an ambivalent peacemaker walked to confront the heritage of Mahatma Gandhi and Martin Luther King with the realities of power as experienced by the leader of the only superpower in the world.

Indeed, Obama's understanding of international morality seems to be largely expressed by the proposition that "there's serious evil in the world" -- a truth he confided in 2007 to the New York Times conservative columnist David Brooks, and attributed to the theologian Reinhold Niebuhr -- combined with the assertion that he is ready to "face the world as it is." The world we seek is, of course, the better world of high morality. But morality, properly understood, is nothing but a framework for ideals. Once you have discharged your duty, by saying the right words for the right policies, you have to accommodate the world.


This has become the ethic of the Bush-Obama administration in a new phase. It explains, as nothing else does, Obama's enormous appetite for compromise, the growing conventionality of his choices of policy and person, and the legitimacy he has conferred on many radical innovations of the early Bush years by assenting to their logic and often widening their scope. They are, after all, the world as it is.

Obama's pragmatism comes down to a series of maxims that can be relied on to ratify the existing order -- any order, however recent its advent and however repulsive its effects. You must stay in power in order to go on "seeking." Therefore, in "the world as it is," you must requite evil with lesser evil. You do so to prevent your replacement by fanatics: people, for example, like those who invented the means you began by deploring but ended up adopting. Their difference from you is that they lack the vision of the seeker. Finally, in the world as it is, to retain your hold on power you must keep in place the sort of people who are normally found in places of power.

Who's Paying the Super-Committee?

George Zornick - August 12, 2011 - The Nation

 

The Congressional “super-committee” finally has a roster: we now know the twelve men and women tasked with cutting as much as $1.5 trillion from the federal budget, and quite possibly restructuring entitlements and rewriting the federal tax code.

Unlike any other Congressional committee in recent memory, this “super-committee” will wield enormous legislative power. Their recommendations will be fast-tracked in Congress, meaning they cannot be amended and are guaranteed a simple-majority vote in the Senate. If the super-committee does not produce recommendations, or if Congress does not approve them, massive triggers will be activated: $1.5 trillion will be cut from the budget, drawing equally from defense and domestic spending.

With this much power concentrated among twelve people, K Street is revving up the money machine to help influence the decisions. “Every lobbyist is going to go through their Rolodex to try and figure out all the connections to the twelve members of the ‘super committee,’ ” Steve Ellis, vice president of Taxpayers for Common Sense, told Bloomberg. One Democratic lobbyist quipped to Politico that he was preparing for the super-committee “by writing twelve really large checks.”

Legislators on both sides of the aisle are already concerned about the cannons of cash now aimed directly at the super-committee members. Republican Senators David Vitter and Dean Heller have both introduced legislation to impose transparency requirements and additional financial disclosure from members of the super-committee; in the House, Democratic Representative Mike Quigley and Republican Representative Jim Renacci are circulating a letter calling for, among other things, weekly disclosures from super-committee members campaign contributions and meetings with lobbyists.

Super-committee members, who were selected to represent their party, not strictly their own interests, will no doubt act for a wide variety of strategic and political reasons. And as The Nation's Ari Berman has written, there are much larger problems with the scope of the committee regardless of who is on it, because it will choose between a variety of bad options, and cannot act on job creation. But it’s still important to understand what industries are lobbying them—and which industries already have the inside track.

To that end, The Nation looked at campaign finance data from the Center for Responsive Politics for each member—Democratic Senators John Kerry, Patty Murray, Max Baucus and Democratic Representatives Xavier Becerra, James Clyburn and Chris Van Hollen; and Republican Senators Jon Kyl, Rob Portman, Pat Toomey and Republican Representatives Fred Upton, Dave Camp and Jeb Hensarling.

Two areas were examined: donations from Political Action Committees, and industry donations—money from industry PACs and individuals associated with that industry. The totals are since 1998, when the data becomes available, or over the member’s career since then (in their current seat). When the dollars are tallied, it's clear that the committee's Republicans have filled their campaign coffers with Wall Street money--that's their largest contributor. Democrats have substantial backing from labor groups that could serve as a counterweight, but they take in quite a bit of Wall Street cash themselves.

Political Action Committees

Democrats on the super-committee have taken over $30.6 million from PACs since 1998, and unsurprisingly the largest amount comes from labor PACs, with over $5.3 million in donations (click charts to see full size):

Representatives Clyburn and Becerra, along with Senator Murray, have the largest labor donations, each topping $1 million. Senator Kerry has the lowest from that group, with $267,861. The high totals for labor are typical for Democratic politicians, but may be a good sign for progressives hopeful the Democrats will stand strong against entitlement cuts, which unions strongly oppose.

The health industry is next, followed by the finance, insurance, and real estate sector—these are non-health insurance companies, commercial banks, finance and credit companies, securities and investment firms, and other big corporations typically found on Wall Street. Senator Baucus is the heavy hitter in this category—as chair of the Senate Finance Committee, he’s raked in $1.6 million from this sector. The only other member over $1 million is Representative Clyburn.

Note that for Democrats, both defense and agribusiness are fairly low on the list. Democrats might be more tempted to look toward farm subsidies and defense cuts when the red pens come out. Also, “ideological/single-issue” groups are fifth on the list, but a vast majority of that money was given to Senator Murray, and primarily by women’s groups. This money probably won’t have much bearing on the super-committee.

The Republicans on the super-committee have taken well over $24 million from just the ten largest PAC categories since 1998. By far, the largest contributor is the financial, insurance and real estate sector—also known as Wall Street:

Representative Jeb Hensarling has the biggest career haul from that sector, with $1,732,922 since 1998. This is not surprising, considering he has openly said that bank profits should trump consumer protection, and that recessions are “a part of freedom.”
Health is the next category, representing largely the for-profit health industry—medical professionals, HMOs, and pharmaceutical companies. “Ideological/single issue” PACs place fifth, with just under $2 million in contributions. That money is spread very evenly across the six members, suggesting they each are beholden to active, wealthy conservative groups. Naturally, labor is last on this list, but note that defense is second-last. The defense industry doesn’t have much money invested in this group, and none are prominent hawks.

Industry Money

The other category we examined was donations from industries. This includes both industry PACs and contributions from individual donors affiliated with a particular industry.

From their fourteen largest industry contributors, Democrats have taken in $118.4 million since 1998. Lawyers and law firms, which traditionally support Democrats, place first with over $33.5 million in donations. People who are retired are next, and of the next six categories, four represent the financial sector:

Interestingly, people who mark “retired” on their donations are by far the largest group donating to super-committee Republicans, who collected $29.7 million from their top fourteen industries since 1998. (Like the PAC money, this is much lower than the Democratic total. But it’s important to note that Senators Toomey and Portman are new to the Senate, while the Democrats have all been in Congress since at least 2004, most since before 1998. The data represents the money each industry has invested in the super-commmittee).

The high amount of money from the retired is not totally surprising, given that Republicans are generally an older party, but the super-committee Republicans do indeed have a large number of donors who could be harmed by cuts to Medicare or Social Security.

Again, this data doesn’t provide a unifying theory of how each member will act. There are certainly larger political calculations at play. But when they start getting deep into the federal budget, removing or reducing potentially hundreds of lines, or when they attack the vastly complex tax code, there’s no doubt that special interests will come calling.

Debtpocalypse deferred!

The Legal Duty to Create Jobs

Lost in the Debt Ceiling Debate
By JEANNE MIRER and MARJORIE COHN

The debate about the debt ceiling should have been a conversation about how to create jobs. It is time for progressives to remind the government that it has a legal duty to create jobs, and must act immediately – if not through Congress, then through the Federal Reserve.

With the U3 official unemployment reaching over 9%, the U6 unofficial real rate over 16%, and the unemployment rate for people of color more than double that of whites, it is nerve wracking to hear right wing political pundits say the government cannot create jobs. Do people really believe this canard? On Real Time with Bill Maher a few weeks ago, Chris Hayes of The Nation stated that the government should create and has in the past created jobs, but he was put down by that intellectual giant Ann Coulter who said, "but they (WPA jobs) were only temporary jobs." No one challenged her.

Most of the jobs created under the Works Progress Administration (WPA) - and there were millions of them - lasted for many years, or until those employed found other gainful employment. They provided a high enough income to allow the worker's family to meet basic needs, and they created demand for goods in an economy that was suffering, like today's economy, from lack of demand. The WPA program succeeded in sustaining and creating many more jobs in the private sector due to the demand for goods that more people with incomes generated.

The most galling thing about pundits stating with such certainty that the government cannot create jobs is the implication that the government has no business employing people. In actuality, however, the law requires the government, in particular the President and the Federal Reserve, to create jobs. This legal duty comes from three sources:

1. full employment legislation including the Humphrey Hawkins Full Employment Act of 1978,
   
2. the 1977 Federal Reserve Act, and
   
3. the global consensus based on customary international law that all people have a right to a job with favorable remuneration to provide an adequate standard of living.
   

Full Employment Legislation

The first full employment law in the United States was passed in 1946. It required the country to make its goal one of full employment. It was motivated in part by the fear that after World War II, returning veterans would not find work, and this would provoke further economic dislocation. With the Keynesian consensus that government spending was necessary to stimulate the economy and the depression still fresh in the nation's mind, this legislation contained a firm statement that full employment was the policy of the country. As originally written, the bill required the federal government do everything in its authority to achieve full employment, which was established as a right guaranteed to the American people. Pushback by conservative business interests, however, watered down the bill. While it created the Council of Economic Advisors to the President and the Joint Economic Committee as a Congressional standing committee to advise the government on economic policy, the guarantee of full employment was removed from the bill.

In the aftermath of the rise in unemployment which followed the "oil crisis" of 1975, Congress addressed the weaknesses of the 1946 act through the passage of the Humphrey-Hawkins Full Employment Act of 1978. The purpose of this bill as described in its title is:

An Act to translate into practical reality the right of all Americans who are able, willing, and seeking to work to full opportunity for useful paid employment at fair rates of compensation; to assert the responsibility of the Federal Government to use all practicable programs and policies to promote full employment, production, and real income, balanced growth, adequate productivity growth, proper attention to national priorities.

The Act sets goals for the President. By 1983, unemployment rates should be not more than 3% for persons age 20 or over and not more than 4% for persons age 16 or over, and inflation rates should not be over 4%. By 1988, inflation rates should be 0%. The Act allows Congress to revise these goals over time.

If private enterprise appears not to be meeting these goals, the Act expressly calls for the government to create a "reservoir of public employment." These jobs are required to be in the lower ranges of skill and pay to minimize competition with the private sector.

The Act directly prohibits discrimination on account of gender, religion, race, age or national origin in any program created under the Act.

Humphey-Hawkins has not been repealed. Both the language and the spirit of this law require the government to bring unemployment down to 3% from over 9%. The time for action is now.

Federal Reserve

The Federal Reserve has among its mandates to "promote maximum employment." The origin of this mandate is the Full Employment Act of 1946, which committed the federal government to pursue the goals of "maximum employment, production and purchasing power." This mandate was reinforced in the 1977 reforms which called on the Fed to conduct monetary policy so as to "promote effectively the goals of maximum employment, stable prices and moderate long term interest rates." These goals are substantially equivalent to the long-standing goals contained in the 1946 Full Employment Act. The goals of the 1977 act were further affirmed in the Humphrey-Hawkins Act the following year.

A Global Consensus

In the aftermath of World War II, and for the short time between the end of the war and the beginning of the Cold War, there was an international consensus that one of the causes of the Second World War was the failure of governments to address the major unemployment crisis in the late 20's and early 30's, and that massive worldwide unemployment led to the rise of Nazism/facism. The United Nations Charter was created specifically to "save succeeding generations from the scourge of war." To do so the drafters stated that promoting social progress and better standards of life were the necessary conditions "under which justice and respect for obligations arising under treaties and respect for international law can be maintained."

It is no accident that one of the first actions of the UN was to draft the Universal Declaration of Human Rights. (UDHR or the Declaration). The Declaration was ratified by all then members of the United Nations on December 10, 1948. It is an extremely important document because it not only recognized the connection between the respect for human dignity and rights, and conditions necessary to maintain peace and security. The Declaration is the first international document to recognize the indivisibility between civil and political rights (like those enshrined in the Bill of Rights) on the one hand, and economic, social and cultural rights on the other. The UDHR is the first document to acknowledge that both civil and political rights are necessary to create conditions under which human dignity is respected and through which a person's full potential may be realized. Stated another way, without political and civil rights, there is no real ability for people to demand full realization of their economic rights. And without economic rights, peoples' ability to exercise their civil rights and express their political will is replaced by the daily struggle for survival.

The Declaration, although not a treaty, first articulated the norms to which all countries should aspire. It stated that everyone has the right to an adequate standard of living. This includes the rights to: work for favorable remuneration, (including the right to form unions), health, food, clothing, housing, medical care, necessary social services, and social insurances in the event of unemployment, sickness, disability or old age. There has been a conspiracy of silence surrounding these rights. In fact, most people have never heard of the Universal Declaration of Human Rights.

Similarly, most Americans do not know that the UN drafted treaties which put flesh on the broad principles contained in the Declaration. One of the treaties enshrines Civil and Political Rights; the other guarantees Economic, Social and Cultural Rights. These treaties were released for ratification in 1966. The United States ratified the treaty on civil and political rights and has signed but not ratified the economic, social and cultural rights treaty.

The latter treaty requires the countries which have ratified it to take positive steps to "progressively realize" basic economic rights including the right to a job. Almost all countries of the world have either signed or ratified this treaty. When most countries become party a treaty, they do so not because they think they are morally bound to follow it but because they know they are legally bound. Once an overwhelming number of countries agree to be legally bound, outliers cannot hide behind lack of ratification. The global consensus gives that particular norm the status of binding customary law, which requires even countries that have not ratified a treaty to comply with its mandate.

The Conspiracy of Silence

With the duty to create jobs required by U.S. legislation, monetary policy and customary law, why has the government allowed pundits to reframe the debate and state with certainty the government cannot do what it has a legal obligation to do?

We allow it because of the conspiracy of silence which has prevented most people from knowing that the full employment laws exist, that the Federal Reserve has a job-creating mandate, and that economic human rights law has become binding on the United States as customary international law.

Congressman John Conyers of Michigan knows about the Humphrey-Hawkins Full Employment Act, and he has introduced legislation that would fund the job creation aspects of that Act in the The Humphrey-Hawkins 21st Century Full Employment and Training Act, HR 870. It would create specific funds for job training and creation paid for almost exclusively by taxes on financial transactions, with the more speculative transactions paying a higher tax.

If Congress refuses to enact this legislation, the President must demand that the Federal Reserve use all the tools relating to controlling the money supply at its disposal to create the funds called for by HR 870, and to start putting people back to work through direct funding of a reservoir of public jobs as Humphrey-Hawkins mandates.

There is nothing that would prevent the Federal Reserve from creating a fund for job training and a federal jobs program as HR 870 would require, and selling billions of treasury bonds for infrastructure improvement and jobs associated with it. The growth in jobs would stimulate the economy to the point that the interest on these bonds would be raised through increased revenue. There is no reason the Fed on its own could not add a surcharge on inter-bank loans to fund these jobs. These actions could be done without Congressional approval and would represent a major boost to employment and grow the economy. If the Federal Reserve is going to abide by its mandate to promote maximum employment, and comply with the Humphrey Hawkins Act, and the global consensus it must take these steps.

Failure of the Fed and the President to take these affirmative steps is not only illegal, it is also economically unwise. The stock market losses after the debt ceiling deal is in part based on taking almost 2 million more jobs out of the economy and will only further depress demand creating further contraction in the economy. This is not an outcome any of us can afford.

Double-Dip Recession? How Our Dysfunctional Political Class Has Made Another Grueling Collapse Far Likelier

Just a few short months ago, few analysts would say publicly that the American economy was likely to slide into another grueling period of recession. That's changed.
By Joshua Holland, AlterNet
Posted on August 10, 2011


The single bright spot in this anemic “recovery” had been steadily rising stock prices. Although the market staged a modest rally on Tuesday, news of the debt ceiling deal was followed by a massive sell-off in stocks – the S&P 500 saw its biggest one-day drop in more than a year the day the deal was announced. After losing $14 trillion in household wealth in the crash, Americans' nest eggs had rebounded to some degree, but whether their 401(K)s and investment accounts hold their value in the coming months remains to be seen.

The outlook for the economy is extraordinarily bleak. But we've pulled ourselves out of deep recessions before. What's different now is the profound, tea-party stained dysfunction plaguing our political class. As I wrote recently, if the economy does end up contracting in the near future, it will be a recession driven by the “age of austerity” embraced by Washington – and the contractionary policies it has ushered in.

That scenario appears more likely today. Just a few short months ago, there were very few analysts who would predict that the American economy stood a decent chance of sliding into another period of grueling recession. The consensus held that while we were recovering far too slowly in light of the depth of the crash, we were nevertheless on the rebound. But that thinking has changed. Last week, former Treasury Secretary Larry Summers estimated that there was a 33 percent chance of the economy once again falling into recession – the dreaded “double-dip.” Other economists put the likelihood a bit lower, but researchers at the Federal Reserve tell us that, since World War II, about half of the times the economy has grown as slowly as it has in the first half of this year, a recession has followed within twelve months.

For the majority of Americans, the official end of the last recession was merely an abstraction – it in now way reflected the profound economic pain tens of millions of working people continued to feel. Since 2009, when the wonks at the National Bureau of Economic Research (NBER) set the official end of the Great Recession, the unemployment rate has edged down tick, but most of that was due to people giving up and dropping out of the workforce. The share of the population that has a job today is about the same as it was in the early 1970s, before women entered the workforce en masse.

Housing prices bottomed in 2009, then had a brief and sputtering recovery, before hitting a new low early this year, well after the official end of the recession. Around one in four homeowners with a mortgage still owe more on their properties than they're worth, and the foreclosure crisis continues unabated. New business creation has ground to a halt, people are running up credit card debt to make ends meet and new grads aren't leaving home to start out on their own.

High oil prices have squeezed already strained household budgets -- consumer spending dropped in June and “consumer confidence” about the future plunged in July. The Japanese Tsunami caused supply disruptions, the eurozone is a mess and China's economy is slowing – with our trading partners slumping, we certainly won't see an export-led boom anytime soon.

The slump in demand for companies' goods and services remains our core problem, and that problem will only be magnified as the last of the stimulus funds dry up, the temporary payroll tax break expires and extended unemployment benefit run out later this year. Without more help from Washington, states and municipalities are expected to shed 450,000 public sector jobs next year.

Last year, with the private sector economy continuing to slump, an analysis by Moody's Analytics found that almost one in five dollars in American consumers' wallets came from one government program or another. The public sector has already seen deep cuts, and that trend will only worsen with Washington's relentless focus on deficit reduction. Without those dollars, there will be fewer consumers demanding American companies' goods and services, and the private sector will continue to have little incentive to hire. Although the cuts in the debt reduction deal are “backloaded” to some degree, $70 billion in cuts will hit before the end of next year, which will cost the economy hundreds of thousands of jobs, resulting in more people out of work, missing mortgage payments and not spending much money.

And they're not done. In downgrading America's debt last week, S&P relied on some dodgy economi analysis, but its view of the political situation is spot-on: the GOP's absolutism is making governing next to impossible. Not only are all revenue raises effectively “off the table,” in all likelihood any significant effort to kick-start the economy is as well. Senator Jim DeMint, R-South Carolina, said that the debt ceiling was simply “round one” in a 15-round brawl over spending and “entitlements.” If their position were that we need to pay down the debt as soon as unemployment drops below 7 percent and the housing market stabilizes, it wouldn't be an entirely insane position. Doing so in this economic climate is ideologically driven madness.

And the real danger is that we'll get into a disastrous kind of feedback loop if the economy starts contracting. That would certainly lead to higher deficits, as tax revenues sank to new lows and the demand for anti-poverty services grew. The deficit hawks will use that rising deficit to call for more cuts, and without some new engine of private sector growth emerging, we'll stay stuck treading water. We've already lost a decade – after the dot-com bust, median incomes only surpassed those in 1999 during one year – 2006 – and have only declined since then.

In his book, Collapse, Jared Diamond looked at a bunch of societies that had seen their physical climates change and tried to determine what made some die out while others persevered. It wasn't the severity of the change, or its speed that was the determining factor, but the foresight of those societies' leaders – their ability to properly diagnose the problem and adapt – to come up with proactive solutions to the problems they faced. The economic woes we're suffering are man-made, but we may look back on the era in which American prosperity collapsed and see the same kind of stubborn refusal to acknowledge reality as a proximate cause.

Progressive Groups Unveil 'Contract For The American Dream'

Tuesday, August 9, 2011 by Huffington Post
by Sam Stein

WASHINGTON -- In the wake of the deal to raise the nation's debt ceiling, widely viewed as yet another setback for the progressive community, advocacy groups on the left are redoubling efforts to change the political narrative.

S&P's decision to downgrade the United States' debt and the market selloff that followed has only emboldened those voices who believe the main structural problem plaguing the economy has less to do with debt and more to do with a lack of economic growth.

On Monday afternoon, MoveOn.org and Rebuild the Dream announced a campaign to build up a popular movement that could match (if not surpass) the debt reduction crowd in both size and energy. And they have borrowed a concept from former House Speaker Newt Gingrich (R-Ga.) as their organizing principle.

The campaign, led by Van Jones, President of Rebuild the Dream; Justin Ruben, Executive Director of MoveOn.org; and Rep. Jan Schakowsky (D-Ill.), among others, is debuting a new Contract for the American Dream. They describe it as "a progressive economic vision crafted by 125,000 Americans … to get the economy back on track." Its debut will involve a nationwide day of action, as well as an ad in The New York Times to run sometime this week, organizers said.

The basic premise of the campaign is that America isn't broke, it's merely imbalanced. In order to stabilize the economy, politicians should make substantial investments in infrastructure, energy, education and the social safety net, tax the rich, end the wars, and create a wider revenue base through job creation.

"Many of our best workers are sitting idle, while the work of rebuilding America goes undone," reads one bullet point of the Contract. "Together, we must rebuild our country, reinvest in our people and jump-start the industries of the future. Millions of jobless Americans would love the opportunity to become working, tax-paying members of their communities again. We have a jobs crisis, not a deficit crisis."

The name of the campaign is, of course, a reference to the Contract for America that Gingrich authored in the run up to the 1994 congressional elections. In the context of the current debate in Washington, the principles it promotes resemble a liberal pipe dream more than an actual outline for potential legislation. President Obama and Democratic leaders in Congress have, after all, been openly willing to throw entitlement reforms into the debt reduction discussion. And the notion that this Congress will decide to make future stimulus-like investments ignores Republicans' complete dismissal of such measures.

And yet, if you look at the specific suggestions, there is overlap between what the Contract advocates and what the president has endorsed -- mainly on the transportation and clean energy fronts. More than that, the Contract fills the obvious need for liberal advocacy groups to build a popular movement in support for their ideological side of the debt debate, something that has been clearly and at times painfully missing as a counterpoint to Washington's current obsession with austerity.

Read the full Contract below:

ContractDream