The campaign to impeach Alberto Gonzales -- organized by Democracy for America and filmmaker Robert "Outfoxed" Greenwald's Brave New Films crew under the slogan "President Bush won't fire Attorney General Alberto Gonzales... but YOU can!" -- is keeping the heat on the Bush administration's most scandal-plagued appointee. At a time when the drive-by media is playing the president's game by turning its attention away from the constant -- and increasingly dramatic -- revelations of high crimes and misdemeanors on the attorney general's part, this sort of citizen activism becomes all the more essential.
More than 77,000 Americans have signed onto the campaign's online petition, which declares: "We, The Undersigned, urge the House Judiciary Committee to begin the process of impeachment of U.S. Attorney General Alberto Gonzales, in accordance with Article II, Section 4 of the U.S. Constitution, which provides for removal of the President, Vice President and all civil Officers of the United States. We believe the process will prove that Atty. General Gonzales has committed High Crimes and Misdemeanors, including the abuse of power and violation of the public trust, both impeachable offenses."
Greenwald's first video promoting the campaign, a devastating review of the attorney general's lies, went to No. 1 on YouTube. The second video, now up as www.impeachgonzales.org, is an even more powerful indictment.
Take a look:
Assessing specific crimes committed by Gonzales, it features revealing testimony by former Justice Department aides and fired U.S. Attorneys -- including New Mexico's David Iglesias, speaking about "threatening" phone calls he received from top Republican officials -- and blistering questioning of the attorney general's actions by members of the House and Senate. The edgiest challenges to the hapless Bush appointee come from House Judiciary Committee members Maxine Waters, D-California, and Robert Wexler, D-Florida.
Wexler demands of Gonzales: "Did the president select Mr. Iglesias to be put on the termination list? Did the vice president put Mr. Iglesias on the termination list? Who put Mr. Iglesias on the list to be fired? It's a national secret, isn't it?
After scenes of fired U.S. Attorneys talking about "unprecedented" pressure from politicians and phone calls from key aides to Gonzales, Waters tells the attorney general: "There's a pattern here, and it doesn't look good."
Across the screen flash the words:
"Misuse of Power."
This week, Democracy for America activists around the country will begin delivering boxes of petitions to congressional offices nationwide, with the purpose of letting key members of the House and Senate know there is local support for impeachment.
The message from DFA is an important one for Congress. At a time when public disappointment in the legislative branch of the federal government is beginning to rival frustration with the executive branch -- as evidenced by recent polls that show approval ratings for the Congress into the depths occupied by Bush -- it is clear that simply letting the president have his way isn't working. There is no question that, as DFA chair Jim Deans laments, "President Bush continues to back his old Texas crony over the integrity of the Justice Depatrment." But against the president's stonewalling, there is a reality to which Dean correctly draws our attention: "Remember Rumsfeld? Michael Brown? Scooter Libby? The President loves to talk tough. But we've proven that with enough pressure we can make them step down, get fired, or go to jail."
Recalling Bush's "Heckuva job, Brownie" defense of his Federal Emergency Management Agency administrator shortly before Brown was forced out for blowing the response to Hurricane Katrina, Dean is suggesting that the operative phrase of the moment should be, "Heckuva job, Al!"
The bottom line is a vital one for those who are serious about the American experiment: If Alberto Gonzales is allowed to remain in office without an appropriate challenge from Congress -- even if that challenge falls short -- then the contemporary interpretation of the sections of the Constitution dealing with executive-branch accountability will be radically at odds with the intention of the founders. And the prospect that wrongdoers and incompetents in future administrations -- be they Republicans or Democrats -- will be rendered nil.
John Nichols' new book is THE GENIUS OF IMPEACHMENT: The Founders' Cure forRoyalism. Rolling Stone's Tim Dickinson hails it as a "nervy, acerbic, passionately argued history-cum-polemic [that] combines a rich examination of the parliamentary roots and past use ofthe 'heroic medicine' that is impeachment with a call for Democraticleaders to 'reclaim and reuse the most vital tool handed to us by thefounders for the defense of our most basic liberties.'"
One spoke to the heart. One spoke to the head. But both presidential candidates had the same mission: to prevent Senator Hillary Clinton from claiming the soul of their party.
On Tuesday, at the annual Take Back America conference--a three-day gathering in Washington, DC, of thousands of progressive activists--Senator Barack Obama and former Senator John Edwards, each an aspirant for the Democratic Party's presidential nomination, delivered back-to-back speeches that delineated the stark difference in their political courtship styles.
Obama went first. He started with his own story, talking about his days as a community organizer on the South Side of Chicago, when he was paid $12,000 a year by church groups to help establish job training and after-school programs in a neighborhood hit hard by a steel plant closing. He described his subsequent entry into local politics and decried a Washington dominated by special interests where "all you see...is another scandal, or a petty argument, or the persistent stubbornness of a President who refuses to end this war in Iraq." Blasting lobbyists for oil and pharmaceutical companies, he exclaimed, "They write the checks and you get stuck with the bills, they get the access while you get to write a letter, they think they own this government, but we;re here to tell them it's not for sale."
That was a good applause line. The cynical ways of Washington, he said, are of no use to an Iowa couple he met who own a small business and cannot longer afford health care coverage. Pay-to-play politics in Washington, he pointed out, does not help the workers of Newton, Iowa, who lost their jobs when Maytag closed their plant and shipped their jobs overseas; nor does it do much for the still-homeless in New Orleans, the 45 million Americans without health insurance, and the 15 million American children living in poverty. "The time for the can't-do, won't-do, won't-even-try style of politics is over," Obama proclaimed. "It's time to turn the page."
And to turn the page requires..hope. Obama, jokingly referring to himself as a "hope-monger," maintained that hope gets results, and he pointed to his accomplishments as a state senator in Illinois: passing legislation that tightened government ethics rules, that reformed the death penalty, and that expanded health care insurance for children. His big message: hope can cause transformation. Washington can be changed; the nation can be changed. He knows that because his own life marks a transformation in America. "On paper," he said, it is impossible that I am here--a U.S. senator running for president." It was obvious what he meant: a black U.S. senator running for president.
Obama touched the right policy points. He promised to sign into a law a universal health care plan by the end of his first term. He called for more money for education. He vowed to place a cap on greenhouse-gas emissions and raise fuel efficiency standards for cars and trucks. He voiced support for a minimum wage that is a living wage and for legislation that would help unions organize workers. He urged the shutdown of the Guantanamo detention facility. Noting that he had opposed the Iraq war from the start--"we knew back then that it was dangerous diversion from the struggle against the terrorists who attacked us on September 11th; we knew back then that we could find ourselves in an occupation of undetermined length, at undetermined cost, with undetermined consequences"--he highlighted his previous proposal to begin the withdrawal of US troops from Iraq.
But his appeal was not his policy shopping list. He was promoting himself foremost as an agent of change who can bring about "a new kind of politics." He offered the crowd "a simple truth, a truth I learned all those years ago as an organizer in Chicago...that in the face of impossible odds, people who love their country can change it."
And he connected. The crowd was jazzed by the combo of personal story, progressive policy proposals, and message of transformation. For an audience member looking to be inspired--to be wowed--Obama made it easy. I am your man, he proclaimed. He was convincing.
Moments after Obama was done, Edwards took to the stage. He said little about himself. But he opened by stating he had been wrong to vote to grant George W. Bush the authority to invade Iraq. Congress, he insisted, must display strength and conviction and shut down Bush's war. (This was a slight dig at Obama and Clinton, who recently voted against Iraq war funding but who have not been vocal leaders in opposing funding for the war.) But his primary theme extended beyond the war. America, he said, is currently regarded with disdain throughout the world. Instead, it must become a global "force for good."
He went through the litany. The United States has failed the world in its weak response to the genocide of Darfur. The United States has failed the world by not doing enough to spur economic development in the poorer regions of the globe. (He hailed micro-lending programs.) The United States has failed the world by refusing to limit its carbon emissions. But imagine, he said, if the United States would change its energy policies and reduce its oil consumption. Oil prices would fall and Middle Eastern autocrats would have less money in their pockets. And imagine, he said, if the United States and Europe turned toward biofuels. Africa--a continent full of cheap land and cheap labor--could become a source of such energy supplies. "Millions of children," Edwards said, "would be lifted of poverty."
From global warming to biofuels to poverty in Africa. This was a bit Clintonian--as in Bill. Edwards was displaying his policy wonkishness, while offering himself as a man who knows what must be done to lead the United States in the post-Bush world.
Next, he turned to domestic matters. He referred to his antipoverty policy work of recent years. He called for a national housing policy that does not "cluster poor people together." He proposed a "College for Everyone" program that would provide students money for tuition and books if they worked ten hours a week. He promoted his own universal health care proposal, suggesting it was more universal than Obama's. "I will speak for the poor," he said. "I will speak for the uninsured. I will speak for the disenfranchised. This is my life." Paraphrasing Gandhi, he remarked, "You have to be the change you believe in." The audience applauded Edwards, but he had not rocked the house as much as Obama had.
Edwards, who became wealthy as a successful trial attorney, was arguing a case. Obama, the former organizer, had delivered a motivational speech. There was much overlap between the two presentations: America has to treat its less-fortunate citizens better; it must repair its relationship to the rest of the world; and all this depends on you. There were no apparent policy differences. (Only health care experts can argue how the health care plans of these two candidates vary.) Yet each speech was a different experience. Obama spoke as if he was addressing people looking for love. Edwards spoke as if he was before people about to make a hire. Either man, though, will have to win votes of both affection and confidence to best the woman in the lead.
UPDATE: To see how Hillary Clinton tried to out-populist Obama and Edwards at the Take Back America conference, see my report here.
JUST OUT IN PAPERBACK: HUBRIS: THE INSIDE STORY OF SPIN, SCANDAL, AND THE SELLING OF THE IRAQ WAR by Michael Isikoff and David Corn. The paperback edition of this New York Times bestseller contains a new afterword on George W. Bush's so-called surge in Iraq and the Scooter Libby trial. The Washington Post said of Hubris: "Indispensable....This [book] pulls together with unusually shocking clarity the multiple failures of process and statecraft." The New York Times called it, "The most comprehensive account of the White House's political machinations...fascinating reading." Tom Brokaw praised it as "a bold and provocative book." Hendrik Hertzberg, senior editor of The New Yorker notes, "The selling of Bush's Iraq debacle is one of the most important--and appalling--stories of the last half-century, and Michael Isikoff and David Corn have reported the hell out of it." For highlights from Hubris, click here.
Think of him as the spymaster who came in from the cold. Well, it wasn't actually so cold out there. After all, Robert Gates was on innumerable corporate boards and the President of Texas A & M University (which, not coincidentally, houses the library, presidential papers, and museum of George H. W. Bush under whom he served as director of the Central Intelligence Agency). But after two dozen years in the CIA and on the National Security Council, after a career which touched (or more than touched) on just about every great foreign policy event in Washington's world from the final days of the Vietnam War and the great Cold War struggle with the Soviet Union to the Central American wars of Ronald Reagan, the Iran-Contra Affair, the Afghan anti-Soviet war, and so much else, he was out of Washington and in hibernation until James Baker's Iraq Study Group called him back. Then, of course, he was picked by George W. Bush as the replacement for the disastrous reign of error of Secretary of Defense Donald Rumsfeld.
Gates has, it seems, returned to Washington with a quiet vengeance and evidently with all those skills acquired in his rough-and-tumble years in the intelligence bureaucracy still intact. In practically no time at all, he purged the Defense Department of its leftover neocon civilians, and at every crisis has inserted his own choices in positions of influence -- as secretary of the army, as Centcom commander, and most recently, in place of Rumsfeld's man, Marine General Peter Pace, as head of the Joint Chiefs of Staff. (His emphasis has been on Navy men to replace the discredited Army leadership of the Rumsfeld years.) It's quite a record so far for a man who represented -- until the neocons boarded the ship of state -- more than three decades of the imperial Washington Consensus.
Now, at a moment that couldn't be more crucial, Gates and his "inheritance" get their due, thanks to Roger Morris, a member of the National Security Council Senior Staff under Presidents Johnson and Nixon (he resigned in protest over the invasion of Cambodia) and bestselling author of biographies of Richard Nixon, Henry Kissinger, and the Clintons. Over the next week, the Tomdispatch.com website will offer not just a portrait of the real Robert Gates, but a full-scale, yet miraculously concise, always surprising, history of American "intelligence" (for which read: global covert action and covert intervention). Morris, who previously offered a striking two-part portrait of Donald Rumsfeld and the Defense Department at this site (The Undertaker's Tally, parts 1 and 2), now offers the Gates legacy, which is really the legacy of mainstream Washington, the globe's imperial capital for this last half-century-plus.
The Gates Inheritance will be posted in three parts this week and, long as it is, it's actually a marvel of compression, packing into a relatively modest space an epic history of mayhem none of us should avoid -- a grim history that led to September 11th, 2001 and now leads us into an unknown, increasingly perilous future. Think of it as a necessary reckoning with disaster.
Freshman Senator Sherrod Brown, a popular progressive leader who shocked his supporters by voting for the Military Commissions Act (MCA) last year, now says the vote was a mistake that he intends to "correct."
Speaking with Air America's Cenk Uyger at the Take Back America Conference yesterday, Brown said he regretted the "bad vote":
"I take responsibility. It was the heat of the campaign and I made a mistake."
After backing the MCA, commonly known as the "Torture Bill" in the liberal blogosphere, Brown was kicked out of the Blue America fundraising program. Howie Klein, one of three bloggers who runs the effort, says Brown is the "only person" who was ever booted after an endorsement.
I don't think there will ever be a way to understand how so many members of Congress, who take an oath to uphold the Constitution, could vote for such a patently unconstitutional and un-American bill. Some simply denied the reality that they were advancing torture and undermining our Constitutional rights, others buckled under perceived political pressure--although it was hardly a banner year for the bill's Republican sponsors--and some simply admitted they were betraying their oath and their country.
During the congressional debate, for example, then-Judiciary Chairman Arlen Specter admitted on the Senate floor that the bill was unconstitutional. The MCA is likely to go down in history with the Alien and Sedition Acts as one of the worst congressional assaults on the Constitution in American history, as International League for Human Rights President Scott Horton writes in this month's Harper's.
But it is still real progress for members of Congress to admit their mistake and promise to "correct" it, as Brown is doing, just as it was encouraging to see Senator Leahy lead the Judiciary Committee in backing legislation to restore habeas corpus this month.
* * *
Letter to the Editor, The Nation
We'd like to reassure your readers, see your piece "Why Won't MoveOn Move on Habeas Corpus?" May 21, that MoveOn has moved, is moving and will continue to move on habeas corpus. We didn't include habeas corpus in our membership poll, as you noted, because we already knew our members consider the issue a high priority.
Earlier this Spring, we asked our members to call their Representatives on the House Armed Services Committee and demand that they restore habeas corpus language in the Defense Authorization Bill. Last year we mobilized against the Military Commissions Act, did a major campaign against the government's wiretapping program, supported Senator Feingold's call for censure, ran an ad against wiretapping that compared Bush to Nixon, mobilized members before every relevant committee vote in Congress, helped put together an event with the American Constitution Society and the Liberty Coalition where Al Gore attacked the Bush Administration's assault on civil liberties in detail, and another event where Senator Feingold did the same.
Right now, we're working in coalition with other organizations to find more opportunities to restore habeas corpus and other constitutional rights eliminated or undermined by the Bush Administration with Congressional complicity. We share your concern that everything possible be done to achieve this goal.
MoveOn.org Political Action Executive Director
By a vote of 5 to 4, in December 2003, the Supreme Court upheld a major provision of the McCain-Feingold campaign finance act that prohibits corporations (and labor unions) from paying for ads that mention the name of a federal candidate, and that are broadcast 60 days before an election or 30 days before a primary.
That narrow ruling is now under challenge and could be overturned in the next few weeks, thanks to President Bush's appointments of John G. Roberts Jr. as Chief Justice and Samuel A. Alito Jr. as an Associate Justice.
The case involves Wisconsin Right to Life, Inc., which campaigned to prevent the re-election of Senator Russell Feingold (D-Wis.), by taking large sums of money from corporations to buy phony "issue" ads on radio and television. The ads attacked Feingold and Herb Kohl, the other Wisconsin Democrat in the Senate, for blocking Bush judicial nominees. Under the 2003 decision, such bogus ads were the "functional equivalent" of campaign ads and thus banned by the McCain-Feingold provision.
During oral argument in April, Justice Stephen G. Breyer said that what Wisconsin Right to Life was "asking for is for us...to say either in practice or in theory, [the] McCain-Feingold campaign finance law is unconstitutional...If we agree with you in this case, good-bye McCain-Feingold." Justice Antonin Scalia said that Breyer had it right.
Roberts and Alito indicated they were willing to do what Wisconsin Right to Life wants them to do, which would be to open what a New York Times story described as "a significant loophole in the measure that would invite a flood of advertising paid for by corporations and unions as the 2008 elections move into high gear."
But these self-described conservative justices would not be doing what the late Chief Justice William H. Rehnquist would have done, as he made clear in a 1978 case, First National Bank of Boston v. Bellotti, in which the issue was whether the freedom of speech guaranteed by the First Amendment was abridged by a Massachusetts criminal statute barring banks and business corporations from spending money to influence voting on referendum proposals.
In another 5-4 decision, the Court ruled for the bank. And in the April oral argument, Wisconsin Right to Life counsel James Bopp Jr. said that Bellotti upheld "corporate efforts to influence Legislative and Executive branch officials."
But Rehnquist was a Bellotti dissenter. "A State grants to a business corporation the blessings of potentially perpetual life and limited liability to enhance its efficiency as an economic entity," he wrote. "It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere. Furthermore, it might be argued that liberties of political expression are not at all necessary to effectuate the purposes for which States permit commercial corporations to exist."
Even more memorably, he said this: "I can see no basis for concluding that the liberty of a corporation to engage in political activity with regard to matters having no material effect on its business is necessarily incidental to the purposes for which the Commonwealth permitted these corporations to be organized or admitted within its boundaries."
Michael Moore's new health care documentary "SiCKO" premiered in Manhattan last night, with an unusual group of movie stars walking the red carpet at the famous Ziegfeld Theatre. The paparazzi were reduced to snapping pictures of non-celebrities, like rescue workers who were denied health care for ailments they contracted on September 11, and dozens of nurses decked out in maroon "SiCKO" scrubs. The nurses are part of a national alliance advocating health care reform, including several labor unions, doctors' organizations, consumer groups and MoveOn.org, which cosponsored the premiere with The New York Observer.
In his opening remarks, Harvey Weinstein, co-chairman of the company that produced "SiCKO," singled out MoveOn for helping promote and defend Moore's last documentary, "Fahrenheit 9/11." (The group hosted house parties across the country and urged its members to make the film a "huge hit.") Then Weinstein blasted the timid entertainment industry and overbearing insurance companies that stifle hard-hitting documentaries, telling the audience how Moore persevered in this challenging environment because he is a "true American hero."
Moore told the crowd that production was delayed five months because it was hard to find an insurance company to back an expose of insurance companies. Smaller insurers were worried that suits could put them out of business, Moore explained, but his fact-checkers are so good he's never been successfully sued.
The audience enthusiastically cheered Moore, and interrupted the film several times with applause, although it doesn't actually offer many red meat moments. The tone is more "Roger and Me" than "Fahrenheit 9/11," pushing fundamental questions instead of political jeremiads. If we really value the heroes of 9/11, why are some suffering without health care for the injuries they sustained while protecting us? How can this nation celebrate the quarterly returns of HMOs that minimize human life to maximize profits? Why does our public discourse demonize the health care systems of our fellow industrialized democracies, which generally prioritize universal coverage? And in one stretch of aggressive agit-prop that even Karl Rove would admire, Moore asks why the detainees at Guantanamo get better health care than the heroes of 9/11, as he sits among those heroes in a boat along the Cuba-U.S. border.
Vito Valenti, a 9/11 rescue worker with pulmonary fibrosis who dragged his oxygen tank down the red carpet last night, said after the screening that it's obvious the U.S. needs "to reform health care and get everybody covered." Currently on disability, he volunteers to help 9/11 first responders with the nonprofit FealGood Foundation. Valenti is praying the public will see the film and take action. "It really opened my eyes and I hope to God it opens up America's eyes," he said. "If other countries can do it, why can't we?"
American right wingers, led by former House Speaker Newt Gingrich, fell in love with France last month. They got excited because the voters of France turned to the right in May and elected Nicolas Sarkozy as their new president. Sarkozy, an urbane secularist who has appointed a leading socialist and one of the world's top human rights advocates to his Cabinet, is hardly an American-style yahoo conservative.
But Sarkozy has proposed serious assaults on France's social-welfare commitments, and that excited Gingrich and his circle – so much so that the potential Republican presidential contender has recently been writing columns with headlines like "A French Lesson for Republicans."
"I know this will seem strange to those of us who like to make jokes about the French, but the fact is that there is a great deal to be learned from the victory of Nicolas Sarkozy (a member of the ruling party) in last weekend's "change" election in France -- and Republicans had better learn it," Gingrich was busy telling his fellow partisans in May.
What Gingrich loved about Sarkozy's win was the fact that a conservative "reformer" replaced a status-quo conservative, former President Jacques Chirac. To his view, it held out the promise that an American conservative reformer who was willing to criticize George Bush – say, um, Newt Gingrich – might be able to hold the presidency in 2008.
Gingrich was especially enthusiastic about predictions that Sarkozy's "blue wave" was going to sweep over France in this month's parliamentary elections.
But as the French have gotten to know more about Sarkozy's plans for domestic reform, they have grown less excited about surfing that blue wave.
Going into Sunday's second round of elections for the French parliament, it was predicted that Sarkozy's Union for a Popular Movement (UMP) would dramatically improve its position – giving the new president a blank check to battle with unions, university professors, elderly retirees and pregnant moms to cut their benefits. It made political sense, Sarkozy was getting a friendly response from the French media and the opposition Socialist Party was in disarray – with its defeated presidential candidate Segolene Royal sniping publicly at its chairman, Francois Hollande, her longtime but apparently now former romantic partner.
Instead, the UMP lost 45 seats, while the Socialists gained 36 seats and the Communist Party, which had been predicted to collapse, held onto at least 15 seats.
One of Sarkozy's top Cabinet picks, former prime minister Alain Juppe, was defeated by a Socialist and had to resign his position, while a number of the president's allies and aides lost.
"The Right Wing Takes a Left Hook," declared the left-leaning Paris daily newspaper Liberation on Monday, which reported that, "Voters refused to give the party of Nicolas Sarkozy the blank check it demanded."
Though his position is weaker than that of his conservative predecessor, Jacques Chirac, Sarkozy will still have a parliamentary majority. He promises to go forward with his conservative reforms, and he'll undoubtedly succeed on some fronts.
But Sarkozy's demand for a broad mandate has been met with what the conservative business daily newspaper Tribune was met with a "first warning to the president."
Will Newt Gingrich get the warning? Unlikely. American conservatives are desperately seeking heroes these days. So desperately that they are looking in increasingly unlikely places – on the set of the television show "Law and Order," in France, even in the reject bin to which Gingrich was consigned. Gingrich and others will keep pointing to Sarkozy as an example of what they hope for: the prospect that that the failed Bush presidency can be replaced by another conservative presidency.
The facts from France suggest that circumstances are more nuaced. Sarkozy, both by his own savvy choices and by the choices of the French people, will not play the role Gingrich and other American right wingers would like him to fill. And those American conservatives who have aided and abetted George Bush's presidency will have a much harder time refashioning themselves than their French counterparts.
John Nichols' new book is
Since last November, the United States government has been prepping fighters from Fatah, the security arm of the Palestinian Liberation Organization (PLO), to do battle with Hamas. "The plan, which [Condoleezza Rice] developed after speaking to President Bush, was to put pressure on the Hamas government by providing the Palestinian security forces loyal to [Mahmoud] Abbas with training, intelligence, and large shipments of supplies and new weapons, paid for by the United States and by Saudi Arabia," the Atlantic Monthly reported recently.
The $86 million plan, masterminded by Elliott Abrams of Iran-Contra fame, didn't work out as planned. Hamas easily routed Fatah in Gaza last week. It was both a diplomatic and military failure for the United States.
The US operation received surprisingly little scrutiny in this country. Few pundits noted the irony of the Bush Administration attempting to undermine the democratically-elected (though hardly moderate) Hamas government while preaching the virtues of democracy in Iraq.
In the wake of Hamas's latest victory, the Administration is once again trying to prop up Fatah with a "West Bank First" strategy. They better hope that this plan works better than the last one.
Thank you, Blackstone, for being so greedy.
Your decision to go public in an IPO has, at long last, led to much-needed scrutiny and legislation that may upend the rules of the game in which secretive private equity partnerships have exploited what is legal but should be illegal: a 20-year-old tax provision that allows partnerships like Blackstone to pay a 15 percent tax rate on capital gains as a limited partnership-- rather than the 35 percent corporate rate.
This is morally and economically criminal--especially at a time when the corporate tax base has already been severely eroded due to offshoring, tax havens and other quasi-legal tax plans devised by these masters of the universe and their accomplices in high-end legal and accounting firms.
After Blackstone disclosed the value of its public offering--putting co-founder Stephen Schwarzman's stake at about $7 billion--the AFL- CIO urged the Securities and Exchange Commission to require Blackstone to register as an investment company. As the Wall Street Journal reported, that would require more disclosure, including of investment strategy. The SEC has not yet ruled on the matter.
Meanwhile Blackstone's public buyout--and its attempt to avoid taxation at the same rates paid by corporations--is so brazen that it has pushed leaders of the tax-writing committees and other legislators to consider proposals to end this little-known tax break.
Senator Charles Grassley (R, Iowa) and Finance Committee Chair Senator Max Baucus, (D, Montana)--not known for being a fierce populist---are now openly acknowledging that private equity firms' attempt to exploit this loophole has gone too far. Last week, they introduced the Baucus-Grassley bill--with the intent of stopping Blackstone and other private equity firms (and hedge funds and venture capital firms) which may go public from exploiting this tax advantage. This is good news--especially at a time when this country needs new revenues for a serious public investment agenda. The New York Times has calculated that the legislation could more than double the revenue for the peoples' coffers by increasing the tax burden on private equity firms from $2.3 billion to $5.2 billion. And the figure might be much higher when assets in previous investments are included.
But the fact that the bill needs fine-tuning is now moving some legislators to consider broader steps--for example, ending the favorable tax provision for all private equity and hedge funds --not just those going public-- raising taxes on "carried Interest" (hefty performance fees) and increasing tax revenue from capping offshore tax deferrals.
Even some on the Finance Committee admit the Chair's proposed legislation is only a first step. For one, it is too narrowly gauged. It goes after only publicly traded firms--and almost all private equity and hedge fund firms are private. It also elides another outrageous tax break that has greatly enriched the alternative investment industry. That is, how to tax "carried interest." Think that's arcane? As the New York Times recently pointed out, it's simply a "euphemism for the hefty performance fees that fund managers haul in." At the moment, those hefty fees are taxed at the capital gains rate of 15 percent instead of ordinary income tax rates of up to 35 percent, which every other corporate executive pays. (And they should all be paying more.) And it's a break that many experts think has even bigger implications than how the partnership is taxed.
And here's another loophole to be outraged about: Since Blackstone has already filed to go public, the bill would give it a five-year grace period at the lower tax rate. Why? Does Blackstone's Chief Executive Stephen Schwarzman really need the money? Consider that both Blackstone and Fortress Investment Group, which went public earlier this year, have until 2012 to pay the increased tax rate. Can't you see a handful of Senators making a move--between now and then--to repeal the legislation? The good news: yesterday Rep. Peter Welch (D-Vt.) introduced a bill that would eliminate that grace period. (Anyone who cares about taking on corporate greed, and restoring sanity, fairness and decency to our economy at a time when workers' wages are stagnant and benefits like health care and pensions are being shredded should express their outrage to Baucus, Grassley and finance committee members over this unnecessary grace period.)
Now, here's a sweet irony and reason as to why justice may be served-- that is, why the American people may not be shafted at the expense of Wall Street's Masters of the Universe. It seems that Blackstone (and the private equity crowd, more generally) hasn't been in the pay-to-play game long enough to have spread around the campaign dollars needed to ensure that the bill is derailed. Moreover, they're also weak on the lobbying front. According to the Wall Street Journal's detailed weekend reporting piece, "Unlike industries like telecom that have huge lobbying shops, the private-equity industry formed its advocacy group only a few months ago."
Yet here's the disgrace: the WSJ reports that private-equity supporters "profess confidence" they can defeat the measure. And Saturday's New York Times quotes one Senate aide, "this is a fundamental misstep in moving legislation in a closely divided Senate. It is unclear what kind of support , if any, the bill will garner." Okay, Republicans still have real strength in a closely divided Senate. That's a given--after all, it's a party that has consistently sold out the people to the highest bidders.
But what about the Democrats in the Senate? I know where the new populist-progressive Senators--Bernie Sanders, Jon Tester, Sherrod Brown, Jim Webb and Amy Klobuchar--will stand. But what about Hillary Clinton-- with her many ties to Wall Street and the financial industry? What about Chris Dodd or Joe Biden, both from states with powerful finance lobbies? (Yesterday, in a sign that he's wobbly Dodd--Chair of the Senate Banking Committee--asked the Chair of the SEC and the Treasury Secretary to examine impact the Baucus-Grassley legislation on publicly traded partnerships could have on the markets.) And what about Barack Obama--who hasn't voted a populist streak in his time in the Senate? And what about former Senator John Edwards--a man running a good populist campaign who worked for Fortress, that private equity firm which launched a public offering earlier this year replete with big payouts? Which side are they on?
Remember that sharp and smart lesson in populist economics delivered by Senator Jim Webb of Virginia in his response to Bush's State of the Union address? The freshman Senator from Virginia talked bluntly and forcefully of an America "drifting apart along class lines"; he pointed out that "it takes the average worker more than a year to make the money that his or her boss makes in one day." It was a message that resonated in last November's elections--witness Webb's upset victory--and the victories of Ohio's Brown, Vermont's Sanders, Minnesota's Klobuchar and Montana's Tester--all candidates willing to speak about economic issues vital to ordinary people.
In a forceful challenge to the destructive inequalities embedded in our supposedly healthy economy, Webb said these times remind him of the age of robber barons a century ago, when a Republican President, Teddy Roosevelt, challenged corporate influence and irresponsible wealth. It's high time to challenge the rapacious robber barons of our time. The first step is to close these loopholes, end any grace periods and get to work on finding resources--through fair taxes on the rich, and on corporations stuffed with profits--to rebuild our country's economic foundations and civic promise.
Just when you think the roiling relations between the US and Iran might be quieting down--they heat up again. In the last week, while two US aircraft-carrier strike forces continued to patrol the Persian Gulf (after "exercises" that took the carriers directly through the Straits of Hormuz and off Iran's coast), American accusations against the Iranians have only escalated. Just as, last month, American officials continued to insist that the Iranians were supplying sophisticated roadside bombs to Iraqi insurgents (who are the enemies of their Shiite allies), so, this week, Secretary of Defense Robert Gates "tied Iran's government to large shipments of weapons to the Taliban in Afghanistan and said Wednesday such quantities were unlikely without Tehran's knowledge."
Similarly, Undersecretary of State Nicholas Burns told CNN: "[T]here's irrefutable evidence the Iranians are now doing this." (Forget the fact that the Iranians have long been fierce enemies of the Taliban and that the Afghan Defense Minister dismissed such claims out of hand.) In Baghdad, General David Petraeus, head of President Bush's surge operation, also lashed out at the Iranians. ("The Iranian influence has been very, very harmful to Iraq. There is absolutely no question that Iranians are funding, arming, training, and even in some cases, directing the activities of extremists and militia elements.") And three Iranian diplomats were briefly detained and questioned by the U.S. military.
For the Bush administration, it seems, Iran has become the explanation for everything that has gone wrong (even, last week, in the Gaza Strip), the equivalent of Ronald Reagan's Evil Empire reduced to a regional scale. According to Brian Ross of ABC News, the CIA has already helped launch secret terror operations inside Iran and President Bush has signed a "non-lethal presidential finding" to "mount a covert ‘black' operation to destabilize the Iranian government." In addition, the administration has been waging a complex, partly covert, "financial war" against Iran. ("The aim is to squeeze the Iranian economy so that the nation's leaders will decide the price of developing nuclear weapons is just too high."); and it also has a $75 million fund at its command to "promote democracy" or a "velvet revolution" in that country.
In the meantime, Helene Cooper and David Sanger of the New York Times report that a struggle continues within the administration about whether or not to launch an air attack against Iranian nuclear facilities before President Bush leaves office. Vice President Cheney and his supporters, as well as beleaguered neocons now increasingly outside the government, continue to push for this, organizing conferences around the world -- as reporter Jim Lobe wrote recently at his Lobelog blog--to brand Iran "Public Enemy Number One" and call for the Bush administration to strike now. ("Mr. President, the truth is that one of the most evil regimes in the world as we know it is on the verge of acquiring the most powerful weapon in the world as we know it.")
In the meantime, the Iranians, who previously captured (and then, with much fanfare, released) a boatload of British sailors, now seem to be rounding up and imprisoning any American citizen--in this case, four Iranian-American scholars and activists with dual nationality--who can be found in Iran and, in the last week, angrily linked their fate to that of five Iranian consular officials taken by American soldiers in a raid in Iraqi Kurdistan this January and held uncharged and largely incommunicado ever since. ("‘We will make the U.S. regret its repulsive illegal action against Iran's consulate and its officials,' state-run Mehr News quoted Foreign Minister Manouchehr Mottaki as saying.") All this is happening in the context of a massive crackdown on intellectuals, activists, union leaders, and academics, a grim, fundamentalist "cultural revolution"--aimed in part at the Bush administration's planning for that "Velvet revolution." According to the Washington Post's Robin Wright, the result has been:
"arrests, interrogations, intimidation and harassment of thousands of Iranians as well as purges of academics and new censorship codes for the media. Hundreds of Iranians have been detained and interrogated, including a top Iranian official.... The move has quashed or forced underground many independent civil society groups, silenced protests over issues including women's rights and pay rates, quelled academic debate, and sparked society-wide fear about several aspects of daily life."
In addition, Admiral Ali Shamkhani, a key military advisor to Iranian supreme leader, Ayatollah Ali Khamenei, warned that, within an hour of an American attack on the country's nuclear facilities, the Iranians would be lobbing "dozens, maybe hundreds" of missiles into the Gulf states that host U.S. bases (and enormous oil reserves). "The U.S.," he said ominously, "will be as surprised with Iranian military capabilities as the Israelis were with Hezbollah in last summer's war in Lebanon."
And this list only scratches the surface of the ever-widening set of disputes and face-offs between the two ill-matched powers. This dangerous dance of fundamentalist regimes remains one of the more potentially explosive situations on the planet, whether either side actually plans to attack the other or not. It involves heavily armed forces in at least three countries (and at sea), endless possible flashpoints, and riven administrations, shakily governing two hostile lands involved in ongoing conflicts in two other lands, Afghanistan and Iraq, themselves in bloody chaos. If that isn't a formula for disaster, what is?
In the midst of this, at the moment, are those four American citizens, under arrest in Iran, labeled "detainees," and, tragically, pawns in a far larger struggle. In "Blowback, Detainee-style," Karen J. Greenberg, co-editor of The Torture Papers and executive director of the Center on Law and Security at NYU, points out that "detainee" is "the word the Bush administration coined to deal with suspected terrorist captives who, they argued, should be subjected to extra-legal treatment as part of the Global War on Terrorism. Now, that terminology is, as critics long predicted might happen, being turned against American citizens."
In demanding the release of the Americans, the Bush administration finds itself in a situation that gives the old phrase, "hoist by one's own petard," new meaning. As Greenberg concludes: "Try as they might, Bush administration officials can only cry foul by calling attention to their own systematic violations of justice and the law. In their mouths, the appeal to fundamental rights rings hollow indeed, depriving Americans of the protections afforded by once-accepted standards of decency and justice."