George Zornick | The Nation

George Zornick

George Zornick

Action and dysfunction in the Beltway swamp. E-mail tips to george@thenation.com

Why the Jobs Report Isn’t All Good

Job fair

Job seekers wait in line at a construction job fair in New York in 2012. (AP Photo/Seth Wenig)

The Labor Department released two job surveys Friday morning, and one of them has unambiguously good news: the monthly survey of businesses said the economy added 288,000 jobs in April, beating expectations by a considerable margin and representing one of the highest monthly totals since the 2008 crash. Steve Benen has the chart:

That’s reason to celebrate, and many people—particularly Democratic partisans with an eye on the midterm elections—are doing just that. But the household survey, also released Friday morning, painted a grim picture. It showed the economy actually lost 73,000 jobs. How can one survey say the economy added jobs, while another said jobs were lost? Well, because one of them is wrong, as David Leonhardt notes. They can’t both be true.

Since the household survey has a smaller sample, it’s tempting to give it less weight. But really, one should not draw any firm conclusions until all the data is marching to the same beat—and over a period of months, not in one single snapshot. “The weak household survey hugely dampens the enthusiasm of the strong payroll numbers,” said Heidi Shierholz of the Economic Policy Institute. “We can’t be confident that the economy is entering a new stage of stronger job growth until both surveys are regularly posting strong gains, and that did not happen in April.”

And disturbing fundamentals still abound. The employment rate’s substantial drop from 6.7 percent in March to 6.3 percent in April was due entirely to people leaving the work force, according to the household survey. The overall labor force participation rate fell to its lowest point of the recovery.

While quite a bit of these “missing workers” are baby boomers who retired, about half are of prime working age. In other words, these are people who simply stopped looking for work. The Economic Policy Institute has been tracking who, exactly, these missing workers are:

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If those people were still looking for work, the unemployment rate would be a staggering 9.9 percent. Again, some of those missing workers are rightfully retired, but millions are not. That people are giving up hope in large enough numbers to drive down the “official” unemployment rate isn’t good news. The economic outlook, simply put, remains cloudy at best and dark at worst.

Read Next: Doug Henwood asks if Bitcoin is the future of money.

We’re the Fossil Fuel Industry’s Cheap Date


(Reuters/Sukree Sukplang)

It is a maxim in American politics that oil and gas companies are among the mightiest forces in Washington, second perhaps only to the big banks. They block any kind of meaningful action to reduce the country’s consumption of dirty energy; they enjoy billions in public subsidies—and they even put oil men in the White House.

That is no doubt true. But what’s remarkable is how little the industry actually has to spend to keep DC under control. This table from the Center for Responsive Politics shows the top oil and gas industry contributors in 2013 and 2014, as crucial midterm elections approach. In total, the top twenty contributors spent $6,222,245:

Sometimes that number can be much higher. The industry spent at least $153 million against President Obama in 2012; lobbying and donations costs the industry $536 million for the 112th Congress.

There are few Americans who could muster that kind of spending. But for the oil companies? It borders on trivial. North American oil, gas and coal companies generate $271 billion in profit each year. So take even the highest-end number—$536 million to influence Congress in 2011 and 2012—and compare it to the profits the industry generated over those two years. The money spent on Congress is around .09 percent of those profits.

So picture an American earning the median income—if he or she was able to control Congress as easily, it would cost $31.

Exact spending can be hard to pin down, and the real spending may be higher than what we can quantify, thanks to the millions no doubt pouring into undisclosed groups. But the fundamental point is, the oil industry can control our politics for but a fraction of its wealth.

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The payoffs are garish. The industry gets as much as $52 billion in taxpayer dollars back every year in the form of federal subsidies, which is many magnitudes higher than the amount the industry spends to buy Congress. Most of the subsidies are not challenged, as this graphic from Oil Change International shows:

And beyond this direct largesse, the industry benefits by continuing to operate freely. In a sane world, the people living on a rapidly warming planet would scale back the production of the dirty fuel that’s causing the problem. Surely there’s been some progress around the margins—but by and large, the industry still controls our politics. It barely costs them a thing.

Read more of The Nation’s special #MyClimateToo coverage:
Mark Hertsgaard: Why TheNation.com Today Is All About Climate
Naomi Klein: The Change Within: The Obstacles We Face Are Not Just External
Dani McClain: The ‘Environmentalists’ Who Scapegoat Immigrants and Women on Climate Change
Jeremy Brecher: ‘Jobs vs. the Environment’: How to Counter the Divisive Big Lie
Jon Wiener: Elizabeth Kolbert on Species Extinction and Climate Change
Dave Zirin: Brazil’s World Cup Will Kick the Environment in the Teeth
Steven Hsieh: People of Color Are Already Getting Hit the Hardest by Climate Change
Michelle Chen: Where Have All the Green Jobs Gone?
Peter Rothberg: Why I’m Not Totally Bummed Out This Earth Day
Leslie Savan: This Is My Brain on Paper Towels
Katrina vanden Heuvel: Earth Day’s Founding Father
Wen Stephenson: Let This Earth Day Be The Last
Katha Pollitt: Climate Change is the Tragedy of the Global Commons
Michelle Goldberg: Fighting Despair to Fight Climate Change

Take Action: Stop Cove Point

7 Facts About Our Broken Tax System


(AP Photo/Susan Walsh)

1. We don’t have a progressive tax system. A truly progressive tax system would ask those who are the most well-off in America to contribute the largest share of their income in taxes. Our federal taxes are progressive, but when you account for state, local and sales taxes, top-line taxation rate isn’t really progressive at all. The share of total taxes paid is roughly in line with shares of total income across all earning levels. (Chart via Citizens for Tax Justice)

2. We’re one of the least-taxed countries in the world. Though the animating impulse of much of conservative politics is that we’re over-taxed, total government receipts are less in the United States than they are in any other member of the Organisation for Economic Co-operation and Development, as a percent of GDP. (Chart via Center on Budget and Policy Priorities)

3. Not many companies pay the corporate tax rate—and some don’t pay any corporate taxes at all. Politicians and corporate lobbyists are fond of saying the US corporate tax rate of 35 percent is the highest in the world, which is technically true—but thanks to expansive tax loopholes, many corporations don’t pay nearly that much. Citizens for Tax Justice looked at consistently profitable Fortune 500 companies and found they paid 19.4 percent of their profits in taxes over the past five years. (Note that a single taxpayer earning $37,000 annually pays a 25 percent rate.) Many big companies don’t pay any taxes at all. (Chart via Citizens for Tax Justice)

4. Some of your tax dollars are given to hugely profitable companies. You’ll note in the chart above that these companies have a negative tax rate—meaning they actually get money from the government. This can come in the form of federal tax breaks and other preferential treatment of certain financial instruments. Then consider the subsidies given directly to industry, along with the safety net programs some of these companies force employees to rely on, and the number gets quite big.

Take Walmart, the largest private employer in the country. They take in $16 billion in profits annually. Yet, all told, Walmart cost taxpayers $7.8 billion last year, according to Americans for Tax Fairness:

5. Meanwhile, some people are actually taxed into poverty. Many high-profile conservatives like to complain about their supposedly oppressive tax rates. (Sean Hannity threatened to leave New York state because of the property taxes on his $3.6 million Long Island home.) But there’s one group—low-wage childless adults—who can literally be taxed into poverty.

Americans don’t start owing federal income taxes until they’re at the poverty line. Moreover, the government gives Earned Income Tax Credit to the working poor to offset their payroll tax burden, which eats up a large share of their earnings. That works fine for low-wage Americans with children—but the EITC is oddly structured in a way where childless adults receive only a paltry credit.

A childless adult earning poverty-line wages ($12,119 in 2013) would have a combined payroll and income tax liability of $1,139, but receive only a $169 EITC. This person would be below the poverty line once he or she pays taxes. That doesn’t line up with the credits received by families with children, as this chart from the Center on Budget and Policy Priorities shows.

President Obama has proposed a dramatic boost in the EITC for childless Americans.

6. Washington doesn’t like to address the deficit by raising taxes. There has been quite a bit of deficit reduction talk—and action—since 2008. Despite the fact that, as noted, government receipts in the United States are extremely low, a vast majority of the savings that DC has found has come from cutting things, not raising more revenue. (Chart via the Center on Budget and Policy Priorities)

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7. Much more revenue is out there. The Congressional Progressive Caucus has unveiled a budget plan that closes corporate tax loopholes and recoups lost taxes due to stashed overseas profits, and also contemplates a tax on Wall Street transactions. On tax day, the Progressive Change Campaign Committee unveiled 33,000 signatures in support of that budget. “It’s about fairness. It’s about people paying their fair share,” said Representative Raul Grijalva, co-chair of the CPC, on a press call.

In order to raise more tax revenue, corporations paying negative tax rates are a logical place to start, as are the very wealthy. They are the only ones seeing their income increase, rather than decrease. (Chart via Center on Budget and Policy Priorities)

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11 GOP Excuses for Not Extending Unemployment Benefits

John Boehner

(AP Photo/J. Scott Applewhite)

After months of haggling, the Senate finally passed a five-month extension of long-term unemployment benefits on Monday, retroactive to their expiration at the end of 2013.

The lapse has already cost the economy nearly $5 billion in the first quarter of 2014, as 2.4 million jobless struggle without badly needed checks. Long-term unemployment is at all-time highs in forty-one states, while the share of jobless Americans receiving aid is at an all-time low.

But it doesn’t seem the House of Representatives will act any time soon. Speaker John Boehner and his top lieutenants have made it clear they are not receptive to the Senate bill.

Why? Actually, it’s hard to figure out. Republicans have given myriad and evolving reasons for opposing an extension over the course of this debate, from saying the checks were no longer needed, to saying it must be paid for, to claiming the very nature of the program is immoral.

We have compiled a timeline of the GOP’s reasons below. If you have any more—or can actually determine an underlying logic—let us know.

They Just Don’t Want To. (December 3, 2013) “I don’t see much appetite on our side for continuing this extension of benefits,” said Representative Tom Cole, R-OK. “I just don’t.”

The Benefits Actually Hurt the Jobless. (December 8, 2013) “I do support unemployment benefits for the twenty-six weeks that they’re paid for. If you extend it beyond that, you do a disservice to these workers.” Senator Rand Paul on Fox News Sunday.

It Makes America Vulnerable. (December 23, 2013) “Does it make sense for our country to borrow money from China to give it to the unemployed in America? That is weakening us as a country.” Senator Rand Paul to NBC News.

The Jobs Crisis Really Isn’t That Bad. (January 3, 2014) “But that’s the point, [the program] was meant to cope with an extraordinary situation. But that situation has been dealt with.” Representative Tom Cole, to Buzzfeed.

Because Democrats Want the Extension. (January 7, 2014) “Remember: These are the same folks who gave us the stimulus, who gave us tax increases, and who gave us Obamacare. All of it was done in the name of helping the little guy—in the name of greater equality. And what’s it given us? This mess.” Senate minority leader Mitch McConnell on the Senate floor.

Whatever This Means. (February 6, 2014) “The perception that I get from the Senate right now is: ‘Times are tough. We should make times tougher on our kids to make it easier on us, and then feel better,’” said Representative James Lankford, R-OK. “And I think that’s just not a philosophy I’m willing to support.”

A Benefit Extension Would Be Wicked. (February 5, 2014) “I believe it is immoral for this country to have as a policy extending long-term unemployments [benefits] to people rather than us working on the creation of jobs.” Representative Pete Sessions on the House floor.

No, Seriously, Unemployment Isn’t A Problem. (March 13, 2014) “The extended unemployment benefits by the administration were to be in place until unemployment came down,” said Representative Tom Price. “Unemployment is down.”

It’s Too Late. (March 19, 2014) After months of GOP delay in the Senate, Boehner and Republicans on House Ways and Means now argue the extension is “unworkable” and “can’t be implemented,” since states would supposedly have trouble distributing retroactive benefits. House Democrats say these are “relatively minor concerns.”

We Have to Approve Keystone XL and Repeal Obamacare First. (April 8, 2014) “As the Speaker said months ago, we are willing to look at extending emergency unemployment insurance as long as it includes provisions to help create more private-sector jobs—but, last week, Senate Democratic leaders ruled out adding any jobs measures at all. The American people are still asking, ‘Where are the jobs?’ and House Republicans are focused on our jobs agenda for families and small businesses,” said Boehner spokesman Michael Steel.

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The Fiscal Times: “Steel was apparently citing Democrats’ refusal last week to accept a package of amendments, being pushed by South Dakota Republican Senator John Thune, to the already bipartisan unemployment insurance bill. Thune’s proposal included a veritable laundry list of Republican priorities, from approval of the controversial Keystone pipeline to outright repeal of the Affordable Care Act.”

Because of Benghazi. No Republican has actually claimed this. Yet.

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How the Unemployment Relief Bill Might Weaken Your Pension

Pension protest

(AP Photo/Eric Risberg)

After months of haggling—and months of suffering by the long-term unemployed—the Senate is finally set to pass a bill Thursday afternoon that will reauthorize benefits for Americans who have been out of work for longer than six months.

Republicans have demanded the cost of the extension be offset, and legislators have devised a pay-for known as “pension-smoothing,” which tweaks the formula employers use to fund their pension plans. But some analysts have raised concerns that this seemingly benign formula change could also endanger the solvency of single-employer pensions, particularly those that are already on shaky ground.

In short, the provision will allow companies to contribute less to their pension plans in the short- and medium-term. This raises federal tax revenue in the near-term because employer pension contributions are tax-deductible. While there are some convincing reasons to do this, it’s possible Congress is assuming too much about the health of corporate pensions and allowing some underfunding that could come back to bite both workers and taxpayers in the years ahead.

The detailed reasons are complicated, but important. Federal rules dictate certain levels at which employers must fund their pension plans to ensure that workers still get their promised retirements even if the company runs into financial trouble. The formula is predicated on interest rates, because they determine how much the pension fund will yield.

Low interest rates naturally mean pension plans don’t have a particularly good long-term outlook, and when the long-term outlook is poor, the formula dictates that companies must contribute more money to the pension funds right now. With interest rates near all-time lows, that’s exactly what has been happening.

But many companies argue that since interest rates are being kept unusually low by the Federal Reserve in order to stimulate economic activity, they shouldn’t actually have to be forking over all this cash to their pension plans.

Accordingly, the pension-smoothing provision in the unemployment bill tweaks the formula to allow companies to contribute less money now, and more later on. (The provision applies only to corporate, single-entity pensions, not state or local pension funds. Also, the “more later on” part of this means it’s not really a revenue- raiser but an accounting gimmick, as we’ve noted before.)

The proposed change has gotten virtually no public attention, but behind closed doors, has been the subject of serious lobbying by business interests. “The businesses always lobby very hard to keep more of their dollars now and not have to put them in those pensions. Many of those businesses are now trying to get out of the pension business altogether,” said Romina Boccia, a fellow at the Heritage Foundation who has worked on this issue.

“The way that they’re convinced, of course, over on the Hill is these companies come in and they say ‘We want to use this money to create jobs in your district and expand our business there,’ and of course that’s very appealing to lawmakers, especially in an election year,” she said.

There is no doubt merit to the business argument here, and having more cash on hand isn’t a bad thing in this economy. For companies with a good long-term profit outlook and well funded pensions, the pension-smoothing provision makes a lot of sense.

And in fact, the corporate pension gap—which was thought to be an enormous ticking time bomb for much of the recession—rebounded remarkably in 2013. The Towers Watson firm studied the Fortune 1000 pension plans and found they rebounded to pre-2008 levels last year. This chart shows a dramatic increase in the number of companies with well-funded pensions:

But many dangers lurk. Analysts credit two primary factors for the rebound: strong equity returns and increased employer contributions.

So a pension-smoothing plan that reduces contributions rolls back a key reason for recent progress—as would any unforeseen decrease in equity returns. Only one year removed from a perilous corporate pension-funding gap, it is perhaps unwise to immediately give companies a pension-funding pass. (It’s also perhaps unnecessary—as interest rates begin to rise, as they are now, company obligations will begin to decrease anyhow.)

Also, the pension-smoothing provision applies to all pension plans, not just the ones on stable financial footing. So those seven percent of pension plans that are funded below 70 percent—which is already dangerous—will also be able to contribute even less going forward. This dramatically increases the risk of pension fund failure at those companies.

Not surprisingly, those troubled companies have been the ones lobbying hardest for the smoothing change, according to Boccia. “They lobby even harder because they need the cash more than the companies that are doing fairly well right now, and have a pension that’s well-funded,” she said, adding that she raised the issue in a meeting with lobbyists who were pushing for the pension-smoothing fix. “They argued with us that ‘Well, [those troubled companies] need it even more because we need to free up cash now to make sure we’re better off down the road, that we’re more profitable than we are now.”

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A final danger is that Congress will just keep extending the pay-less periods of pension-smoothing. The provision in this week’s unemployment insurance bill is actually just an extension of a similar provision in the transportation bill two years ago, which was about to expire.

Any failure of a pension fund would result in a taxpayer bailout via the Pension Benefit Guaranty Corporation—along with the serious benefit reductions for workers that usually come along with a bailout. That’s not to say the unemployment relief bill shouldn’t be passed because of this provision, but the possible implications shouldn’t be taken lightly.

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How Paul Ryan's Budget Paves the Way for Another Financial Crisis

Rep. Paul Ryan leaves a closed-door meeting on Capitol Hill, April 2, 2014 (AP Photo/J. Scott Applewhite)

Representative Paul Ryan released his budget blueprint this week, and fans of his work were no doubt pleased: it called for $5 trillion in spending cuts over the next decade, focused heavily on domestic, non-military spending. Safety net programs like Medicaid and food stamps would face savage cuts, and the Affordable Health Care Act would be repealed entirely. Meanwhile, both corporate and individual tax rates would be lowered.

It is easy to make the case that the rich get richer and the poor get poorer under Ryan’s so-called “Path to Prosperity” plan: one needs only to look at the literally trillions cut from Medicaid and food stamps while the rich pay much less in taxes.

But it’s important to refine that point and note that the financial sector in particular gets many special favors in the Ryan plan. After all, it is one of Ryan’s leading benefactors and he can even be spotted sipping $350 bottles of wine with industry leaders from time to time. And his budget is no doubt a path to prosperity for them.  

Moreover, in three crucial ways Ryan's budget not only gives Wall Street more leeway to act recklessly, but makes it more likely that average Americans face the consequences.

Cutting the Securities and Exchange Commission budget: Already, the head of the SEC is complaining that her agency’s budget is not nearly adequate to police the country’s massive financial sector. In a speech earlier this year at SEC headquarters, director Mary Jo White said, “our funding falls significantly short of the level we need to fulfill our mission to investors, companies and the markets.” The SEC has only 4,200 employees, but must regulate eighteen different stock exchanges and over 25,000 different market participants—and the agency’s responsibilities are growing thanks to new mandates from the Dodd-Frank financial reform legislation.

Ryan has a much different take in his budget: he thinks the SEC is just too big. He doesn’t apply a dollar figure, but makes it clear the agency’s already meager budget should be substantially “streamlined.”

“In the run-up to the financial crisis and its aftermath, the SEC repeatedly failed to fulfill any part of its mission,” his blueprint notes, ticking off a familiar list of whiffs, from the unsound nature of Bear Stearns and Lehman Brothers to the Ponzi schemes run by Allen Stanford and Bernie Madoff.

So far, so good. But Ryan goes on: “These failures have taken place despite significant increases in funding at the SEC, which has seen its budget increase almost sixty-six percent since 2004.”

Apparently, the extra money was the problem. “This resolution questions the premise that more funding for the SEC means better, smarter regulation. Adding reams of regulations to the books and scores of regulators to the payrolls will not provide greater transparency, consumer protection and enforcement for increasingly complex markets. Instead, the SEC should streamline and make more efficient its operations and resources.”

In short: since the SEC failed to adequately police Wall Street at a time its budget was increasing, the magic solution would be to cut the agency’s budget, because ipso facto the agency’s performance would get better.

This line of thinking would not be unfamiliar to those who follow Ryan’s recommendations for federal anti-poverty programs, and it’s just as wrong here as it is there. As the agency’s director herself pointed out (on several different occasions), the SEC plainly needs more resources to conduct better regulation of a huge financial sector. Ryan provides no evidence, aside from that odd logical twist, that reducing the number of SEC staffers poring over filings from hedge funds would somehow increase oversight of those outfits.

Transferring the Consumer Financial Protection Bureau budget to Congress: Here Ryan resurrects a longstanding GOP proposal: that Congress, not the Federal Reserve, should fund the CFPB.

As it stands now, the bureau’s budget is essentially guaranteed. It can ask the Federal Reserve for funding up to a certain cap, and that request cannot be denied. The caps are fixed percentages of the Fed’s operating expenses. This guarantees autonomy from a Congress where many members (like, say, Ryan) are elected thanks to campaign contributions from the big financial institutions the CFPB polices.

Ryan claims to have a problem with this arrangement only because the Federal Reserve’s profits are supposed to be returned to the Treasury to reduce the deficit, but instead a portion of them are siphoned off to a new bureaucracy—one in which he suggests via scare quotes is ineffective. “Now, instead of directing these remittances to reduce the deficit, Dodd-Frank requires diverting a portion of them to pay for a new bureaucracy with the authority to write far-reaching rules on financial products and restrict credit to the very customers it seeks to ‘protect,’” says the blueprint.

CFPB funding would thus be transferred to Congress under the Ryan plan, and subject to annual appropriations. He doesn’t say what Congress should do with that budget once its under legislators control, but one needs only to look to his SEC budget proposals to get a sense of what would likely happen.

Ensuring Taxpayer Bailouts of Big Banks: This is another up-is-down situation where a lot of unpacking of Ryan’s language is needed. His budget says:

Although the proponents of Dodd-Frank went to great lengths to denounce bailouts, this law only sustains them. The Federal Deposit Insurance Corporation now has the authority to access taxpayer dollars in order to bail out the creditors of large, ‘‘systemically significant’’ financial institutions. This resolution calls for ending this regime, now enshrined into law, which paves the way for future bailouts. House Republicans put forth an enhanced bankruptcy alternative that—instead of rewarding corporate failure with taxpayer dollars—would place the responsibility for large, failing firms in the hands of the shareholders who own them, the managers who run them, and the creditors who finance them.

Sounds good! But that would actually accomplish the exact opposite.

Indeed, Dodd-Frank gave the FDIC the power to wind down too-big-to-fail banks, which is called “resolution authority.” In a crisis, if a failing bank is deemed too big for traditional bankruptcy, a panel of bankruptcy judges can place it in receivership under the FDIC. That FDIC in turn then makes a plan for winding down the institution safely—something Barney Frank called a “death panel” for big banks.

Crucially, under this structure, taxpayers can’t end up paying for this wind down—Dodd-Frank explicitly forbids it. Any taxpayer money used upfront to ease the firm into bankruptcy would be recouped by a structured sale of the bank’s assets. (Note that Ryan sneakily says the FDIC has the authority to “access taxpayer dollars,” eliding the fact that in the end it has to pay them back.)

Ryan’s alternative is to end FDIC’s resolution authority and simply “place the responsibility for large, failing firms in the hands of the shareholders who own them, the managers who run them, and the creditors who finance them.”

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That’s akin to just saying “it will all work out.” It is unlikely in the extreme that the shareholders and managers can somehow bail out a failing big bank, especially in a crisis. Inevitably, Congress and thus taxpayers would have to step in, without any of the established authority like asset sales that the FDIC now possesses.

Ryan’s plan would lead to more taxpayer bailouts of failing big banks—and by stripping down the budgets of the agencies meant to oversee those institutions, make failure more likely in the first place. But in the meantime, his friends on Wall Street could enjoy less regulation, less oversight, and more comfort that taxpayers will someday come to the rescue.

Read Next: John Nichols on a new Supreme Court ruling that locks in big money to politics.

House Democrats Hope Paul Ryan’s Comments Spark Poverty Conversation

Barbara Lee

Representative Barbara Lee (Reuters/Jason Lee)

Washington’s approach to the war on poverty endured a dramatic episode this week when Representative Paul Ryan made inflammatory remarks about the “culture” of America’s inner cities. The 2012 GOP vice presidential nominee and House Budget Committee chairman told a conservative radio program that “we have got this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work.”

Representative Barbara Lee hit back quickly in a widely noted statement: “My colleague Congressman Ryan’s comments about ‘inner-city’ poverty are a thinly veiled racial attack and cannot be tolerated,” Lee said. “Let’s be clear, when Mr. Ryan says ‘inner city,’ when he says, ‘culture,’ these are simply code words for what he really means: ‘black.’”

On Thursday, Lee revealed to a small group of reporters that she has spoken with Ryan about his remarks—and that the two plan to meet to discuss them soon. “I’ve talked to him. We’re going to get together about it. It was a good conversation,” Lee told the reporters, in the office of House minority whip Steny Hoyer. The two convened the briefing to push their anti-poverty message and their effort to get long-term unemployment insurance and a minimum wage increase passed through the House.

Lee said she hopes the controversy can spark a broader conversation about poverty in Congress. “At least the debate is beginning,” she said, noting that Ryan recently conducted a “poverty tour” through several states. “It’s a good debate, that should have happened twenty-five years ago.”

Hoyer agreed that Ryan’s remarks might end up serving a purpose. “Frankly, I think Ryan raising it is a positive. Because it puts it out there as an area of concern,” Hoyer said.

Conciliatory as the two might have sounded, they repeatedly and at length took issue with Ryan’s framing.

“I think part of the issue with a lot of members is, they just don’t get it,” said Lee. “They don’t understand when they make comments such as this that—race is a factor in America, regardless of what you think. And I think Paul Ryan does not quite understand that.”

Hoyer echoed those comments, and said that Ryan’s racial framing served to turn people off from really addressing the issue of poverty. “The majority of poverty is not in inner cities, and the majority of poverty is not minorities,” he said. “Some people don’t understand that, [and] they simplify. And as a result, it undermines the concern of some people because they think it’s not them.”

House Democrats are pushing discharge petitions on the minimum wage and extending long-term unemployment benefits. (The meeting occurred just before the Senate reportedly reached a deal to pass an unemployment benefit extension out of that chamber.)

The discharge petitions allow for a vote on each respective measure once there are 218 signees—the operating theory is that there may be enough votes to pass both bills, but House Speaker John Boehner won’t allow the votes to occur.

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The prospect of either petition reaching 218 is slim, but Democrats feel it allows them to put Republican members who claim they’d support either of the measures on the spot, so they can no longer say they support say, a minimum wage increase, but just haven’t had the chance to vote on it.

The petitions are no doubt a last-ditch effort, but House Democrats are feeling desperate. Hoyer openly admitted that the body in which he serves has made poverty matters worse in the past three years. “There’s no doubt we’ve exacerbated it. By our negligence or by our refusal to act, we’ve made poverty worse,” he said. “We’ve made the status of families in America worse, and we’ve hurt our economy.”

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In Spying Scandal, Did Obama Just Take the CIA’s Side?

President Obama

President Obama speaks about the NSA from the Justice Department on January 17, 2014. (Reuters/Kevin Lamarque)

Late Wednesday afternoon, a White House pool reporter asked President Obama about the explosive allegations made by Senator Dianne Feinstein on Tuesday morning that the CIA was spying on, and removed documents from, congressional staffers who were investigating Bush-era torture.

The question came during a brief media availability at a White House event on women and families. Obama’s response, in full:

The first day I came into office, I ended the practices that are subject to the investigation by the Senate committee, and have been very clear that I believed they were contrary to our values as a country. Since that time, we have worked with the Senate committee so that the report that they are putting forward is well informed and what I have said is that I am absolutely committed to declassifying that report as soon as the report is completed. In fact, I would urge them to go ahead and complete the report and send it to us and we will declassify those findings so that the American people can understand what happened in the past and that can help guide us as we move forward.

With respect to the issues that are going back and forth between the Senate committee and the CIA, John Brennan has referred them to the appropriate authorities and they are looking into it and that’s not something that is an appropriate role for me and the White House to wade into at this point. But the one thing that I want to emphasize is that the substantive issue, which is how do we operate even when we are threatened, even when even gone through extraordinary trauma has to be consistent with the rule of law and our values. And I acted on that on the first day and that hasn’t changed.

About 95 percent of Obama’s remarks involve declassifying the 6,300-page Senate report on “enhanced interrogation” by the CIA, and he restates his desire to have the report be made public.

But the president’s one line on the CIA-Senate debate is deeply troubling: “With respect to the issues that are going back and forth between the Senate committee and the CIA, [Director] John Brennan has referred them to the appropriate authorities and they are looking into it and that’s not something that is an appropriate role for me and the White House to wade into at this point.”

Here’s the problem: Obama’s framing in that sentence very much wades into the debate.

The important context here is the Department of Justice is running two parallel investigations into the CIA’s removal of the so-called “Panetta review”—one into wrongdoing by the Intelligence Committee, and one into CIA wrongdoing.

The CIA claims that Senate staffers illegally obtained a copy of that review, which damns the CIA for it’s role in Bush-era interrogations and is at odds with public statements from the CIA.

But Feinstein strenuously, and at great length, contested that claim in her Senate floor speech on Tuesday. She explained how the Panetta review came into the committee’s possession: either by intentional or unintentional disclosure by the CIA while turning over the 6.2 million documents related to the interrogation program, or by a “whistle-blower” either at the agency or working for the private contracting firm that was vetting the documents. She went on to explain that the Senate Legal Counsel affirmed to her that these were not classified documents, and that the committee was permitted to have them.

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Furthermore, Feinstein explicitly alleged that the CIA’s referral of a criminal report might have been an effort to intimidate Senate investigators.

So when Obama says that “John Brennan has referred [the matter] to the appropriate authorities,” it reads as an implicit rebuke of the intimidation charge. That he mentions only the allegation of Senate misconduct by Brennan and not the parallel investigation into CIA wrongdoing is also troubling.

Obama’s remarks came on the heels of a revelation by White House Press Secretary Jay Carney earlier on Wednesday that the White House was aware of the criminal complaint the CIA planned to file against Senate investigators, but did not intervene.

Feinstein’s office did not immediately respond to a request for comment on Obama’s remarks from The Nation.


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Senate Investigation of Bush-Era Torture Erupts Into Constitutional Crisis

Dianne Feinstein

Senator Dianne Feinstein is trailed by reporters at the US Capitol in Washington on March 11, 2014. (Reuters/Jonathan Ernst)

A gripping battle between the Central Intelligence Agency and the Senate Intelligence Committee broke into public view Tuesday morning, as Senator Dianne Feinstein openly accused the CIA of spying on congressional staffers as they investigated the agency’s illegal detention and interrogation programs under President George W. Bush.

Feinstein’s allegations raise grave questions about how the executive branch interprets constitutional separation of powers, along with raising serious concerns about the integrity of congressional oversight of US intelligence agencies. And lurking in the background is the country’s dirty history of torture following the September 11 terror attacks, which top officials—including those appointed by President Obama—seem determined to brush into the dustbin of history.

In a lengthy speech on the Senate floor Tuesday morning, which you can read here, Feinstein explained how the Senate Intelligence Committee, which she chairs, has come to believe that the CIA infiltrated Senate computers in order to see what investigators had learned about the Bush-era torture programs. She also described the removal of crucial documents from those computers by the CIA.

How We Got Here

The backstory is crucial here, and the issues of congressional oversight and constitutional separation of powers echo throughout.

In 2002, the Bush administration authorized the CIA to begin detaining terror suspects and subjecting them to “enhanced interrogation techniques”—measures that most people now recognize with the less sanitary word: torture.

For years, members of the Senate Intelligence Committee were unaware of this program, save the chair and vice chair. The full committee was abruptly informed of the program by then-CIA Director Michael Hayden in September 2006, only hours before President Bush announced the existence of the program to the public. About a year later, The New York Times reported that the CIA was destroying videotapes of the first “enhanced” interrogations conducted by the agency.

By then, Democrats had taken control of the Senate and demanded answers. Hayden explained to the committee that the videotapes had to be destroyed, but that the CIA possessed paper records and operational cables that were “a more than adequate representation” of what was on the video tapes. He allowed committee investigators to review those documents, which they did over a period of years, culminating in 2009.

What they found was “chilling,” in the words of Feinstein this morning—the interrogations were “far different and far more harsh” than what the CIA had been admitting. Feinstein then wanted a full review of the program by Senate Intelligence Committee, which it approved by a 14-1 vote.

Initially, as she noted this morning, Feinstein wanted the CIA to turn over all relevant documents to the committee in their usual offices, as had been done in the past. Then—CIA Director Leon Panetta, who had been appointed by Barack Obama and confirmed just a month earlier, had other ideas.

Panetta wanted the review to take place at a secure CIA facility in Northern Virginia—something that would seem to undermine an independent congressional review. But, as Feinstein outlined in her speech Tuesday, an agreement was reached with agency officials in which the Senate review would take place on secure computers, but at the CIA facility:

Per an exchange of letters in 2009, then-Vice Chairman Bond, then-Director Panetta, and I agreed in an exchange of letters that the CIA was to provide a “stand-alone computer system” with a “network drive” “segregated from CIA networks” for the committee that would only be accessed by information technology personnel at the CIA—who would “not be permitted to” “share information from the system with other [CIA] personnel, except as otherwise authorized by the committee.”

It’s important to understand that this computer system in effect belonged to Congress, which was conducting crucial oversight of the executive branch as protected by the Constitution. It was this computer system that Feinstein alleges was infiltrated by the CIA.

The CIA began transferring hundreds of thousands, and then millions, of documents related to the enhanced interrogation program to these Senate computers. But it didn’t take long for problems to arise. In 2010, Senate investigators realized that the CIA had removed over 900 files it had initially transferred to them—something Feinstein revealed for the first time Tuesday morning during her speech on the Senate floor.

At first the CIA claimed no files had been removed, then blamed it on the private contractors who were helping the agency vet the documents, and then ultimately blamed it on an order from the White House. The administration denied giving any such order and brokered a peace between Feinstein and the CIA, which included a CIA apology.

But soon a far more severe breach arose.

The Internal Panetta Review

Let’s skip ahead a little bit first, and then get to the other, more crucial breach. In December 2012, the Intelligence Committee completed its 6,300-page review of the Bush administration’s torture programs. The public has not seen this report, as it remains classified, but it has been described as “searing” and highly critical of the CIA and the Bush administration. The CIA has reviewed the report and agrees with some of it, but disagrees strongly with other parts—generally the most damning ones.

But that public stance directly conflicts internal agency analysis. Over the course of the committee investigation, staffers discovered what has been come to be known as the internal “Panetta review.” This was essentially a report ordered by Panetta examining the documents that were being turned over to Congress, in an effort to get a grip on what exactly was being revealed. The committee has a partial version of this review on its computers, Feinstein said, as well as a printed-out, redacted hard copy in a secure location inside the Hart Senate Office building.

By all accounts, the Panetta review is damning. The public first learned of it in December, when Senator Mark Udall referenced it in an open confirmation hearing for CIA General Counsel Dianne Krass. “It appears that [the CIA’s internal detention and interrogation program review], which was initiated by former Director Panetta, is consistent with the Intelligence committee’s report, but amazingly it conflicts with the official CIA response,” Udall said during the hearing.

Feinstein also described the Panetta review this morning as quite critical of the CIA programs, and described “analysis and acknowledgement of significant CIA wrongdoing.”

Naturally the Panetta review is a monumentally important document that appears to undermine—in the CIA’s own words—the agency’s public dismissals of the most serious criticisms of Bush-era torture. It is this document that Feinstein alleged Tuesday morning was taken from Senate computers by the CIA.

Here’s what Feinstein described Tuesday morning:

At some time after the committee staff identified and reviewed the Internal Panetta Review documents, access to the vast majority of them was removed by the CIA. We believe this happened in 2010 but we have no way of knowing the specifics. Nor do we know why the documents were removed. The staff was focused on reviewing the tens of thousands of new documents that continued to arrive on a regular basis. […]

Shortly [after Udall’s comments], on January 15, 2014, CIA Director Brennan requested an emergency meeting to inform me and Vice Chairman Chambliss that without prior notification or approval, CIA personnel had conducted a “search”—that was John Brennan’s word—of the committee computers at the offsite facility. This search involved not only a search of documents provided to the committee by the CIA, but also a search of the ”stand alone” and “walled-off” committee network drive containing the committee’s own internal work product and communications.

According to Brennan, the computer search was conducted in response to indications that some members of the committee staff might already have had access to the Internal Panetta Review. The CIA did not ask the committee or its staff if the committee had access to the Internal Review, or how we obtained it.

Instead, the CIA just went and searched the committee’s computers.

A short time later, CIA Director John Brennan was interviewed at a Council on Foreign Relations event by NBC News’s Andrea Mitchell. He denied “spying” on the Senate, though closely examined, his language does not directly contradict what Feinstein alleged on the Senate floor only hours earlier.

“We weren’t trying to block anything,” Brennan said. “The matter is being dealt with in an appropriate way, being look at by the right authorities, and the facts will come out,” he added. “But let me assure you the CIA was in no way spying on [the committee] or the Senate.” He also denied “hacking.” Depending on how one defines spying and hacking, it’s possible Brennan was still allowing for the existence of the “search” that Feinstein alleges Brennan himself disclosed to her.

The Implications

If what Feinstein alleges is true, it essentially amounts to a constitutional crisis. And she said as much during her speech, describing “a defining moment for the oversight of our intelligence community.”

“I have grave concerns that the CIA’s search may well have violated the separation of powers principles embodied in the United States Constitution, including the Speech and Debate clause. It may have undermined the constitutional framework essential to effective congressional oversight of intelligence activities or any other government function,” Feinstein said. “Besides the constitutional implications, the CIA’s search may also have violated the Fourth Amendment, the Computer Fraud and Abuse Act, as well as Executive Order 12333, which prohibits the CIA from conducting domestic searches or surveillance.”

There’s also the issue of intimidation. The media reports that have been bubbling up recently around this issue have suggested that Senate investigators illegally obtained the Panetta review—some even raised the specter of hacking by the Senate investigators. The CIA went so far as to file a crime report with the Department of Justice, accusing Senate staffers of illegally obtaining the Panetta review.

Tuesday morning, Feinstein strenuously denied the review was illegally obtained, and asserted it was included in the 6.2 million files turned over by the CIA and describing at length why Senate lawyers felt it was a lawful document for the committee to possess.

And, in a remarkable statement, Feinstein accused the CIA of intimidation by filing the crime report. “[T]here is no legitimate reason to allege to the Justice Department that Senate staff may have committed a crime. I view the acting general counsel’s referral [to DoJ] as a potential effort to intimidate this staff—and I am not taking it lightly.”

Feinstein went on to note one fairly amazing fact. The (acting) general counsel she referred to, who filed the complaint with DoJ, was a lawyer in the CIA’s counterterrorism center beginning in 2004. That means he was directly involved in legal justifications for the torture program.

“And now this individual is sending a crimes report to the Department of Justice on the actions of congressional staff,” she noted gravely. “The same congressional staff who researched and drafted a report that details how CIA officers—including the acting general counsel himself—provided inaccurate information to the Department of Justice about the program.”

Remaining Questions

There are several crucial questions going forward.

(1) What else did the CIA do to conduct surveillance on the committee? Feinstein included an interesting aside in her speech. “Let me note: because the CIA has refused to answer the questions in my January 23 letter, and the CIA inspector general review is ongoing, I have limited information about exactly what the CIA did in conducting its search.” This seems to strongly suggest the CIA took other measures to conduct surveillance on Congress besides broaching the committee computer system.

What may these have been? There are a couple possibilities, though we should stress this is pure speculation.

During her speech, Feinstein went to great lengths to describe how the committee also had a physical copy of portions of the Panetta review secured inside the Hart Senate Office Building. She stressed that the documents were properly redacted and transported, and described how access to them is controlled.

Is it possible the CIA gained access to that room to see what the committee possessed in hard-copy form? Again, we should stress Feinstein does not allege this, and that she also said the copy “remains” in Hart. But it would be reasonable to think that if the CIA went to such lengths to see what the committee had in electronic form, it might want to see the physical copies as well. While hacking versus a breaking-and-entering intrusion into a physical space is a distinction without any real difference in a legal sense, a physical CIA break-in of Senate offices would no doubt crank up the temperature of this imbroglio by several degrees.

Also: remember that earlier this year, in response to a question from Senator Bernie Sanders, the National Security Agency did not expressly deny spying on Congress. The NSA may just have been being careful with its language, reasoning that since bulk data collection exists, perhaps members of Congress were caught up in it. But the question remains: if the CIA felt justified spying on Senate computers, may it have listened in on phone calls as well?

(2) Will Obama respond, and what will he say? Feinstein’s grave concerns were echoed Tuesday morning by Senator Patrick Leahy, chair of the Senate Judiciary Committee. “This is not just about getting to the truth of the CIA’s shameful use of torture. This is also about the core founding principle of the separation of powers, and the future of this institution and its oversight role,” Leahy said in a statement. “The Senate is bigger than any one Senator. Senators come and go, but the Senate endures. The members of the Senate must stand up in defense of this institution, the Constitution, and the values upon which this nation was founded.”

So we have the respective chairs of the Senate Intelligence and Senate Judiciary Committees publicly accusing the executive branch—which is controlled by their own party—of stepping across a very serious constitutional line. It cannot be stressed enough that this is a serious crisis.

Can President Obama, himself a constitutional law scholar, avoid comment? If not, what will he say?

For the moment, the White House is saying nothing. Press Secretary Jay Carney gave very little in the way of answers or opinions Tuesday afternoon during his daily briefing, and declined to even characterize Obama as “concerned.” Carney also expressed the president’s “great confidence” in Brennan and the intelligence community.

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(3) Will the Senate Intelligence report on Bush-era torture ultimately be declassified? Underlying this constitutional crisis is a desire by many at the CIA to sweep the Bush-era torture abuses under the rug. That logically would be the clear motivating factor in seizing the Panetta review from Senate investigators.

And Brennan wasn’t afraid to keep pushing that approach—even during the same Tuesday interview with NBC’s Mitchell in which he denied “spying” on the Senate. Brennan also said that the CIA’s history of detention and interrogation should be “put behind us.” (It should be noted, of course, that there is strong circumstantial evidence that Brennan himself was complicit in the illegal torture program when he served in the Bush administration.)

In the wake of her revelations on Tuesday, Feinstein renewed her desire to declassify the Senate report. “We’re not going to stop. I intend to move to have the findings, conclusions and the executive summary of the report sent to the president for declassification and release to the American people,” she said, and suggested the findings will shock the public. “If the Senate can declassify this report, we will be able to ensure that an un-American, brutal program of detention and interrogation will never again be considered or permitted.”

Obama has long said he supports declassification, and it seems it will happen soon. Tuesday, Feinstein was already moving to hold a committee vote on declassification. Committee Republicans will likely oppose it, but independent Senator Angus King, the swing vote, told reporters he is inclined to vote for declassification.


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Rick Perry at CPAC Panel on Criminal Justice: ‘Shut Prisons Down. Save That Money.’

CPAC Panel

Rick Perry (L) makes a remark as Grover Norquist (C) and Bernard Kerik listen during a panel discussion on "Criminal Justice Reform" at CPAC (Reuters/Mike Theiler). 

Pat Nolan strode to the podium and rattled off the facts: more than 2 million Americans are in prison, meaning one in every hundred adults is incarcerated. Fewer than half of those in prison are there for violent crimes; most are drug offenders; and state budgets are badly strained by maintaining this system. Then he read a quote: “Only a nation that’s rich and stupid would continue to pour billions into a system that leaves prisoners unreformed, victims ignored and communities still living in fear of crime.”

This wasn’t an ACLU convention nor an academic confab, however—it was the Conservative Political Action Conference, the infamous annual showcase of the far-right boundaries of the Republican Party. Just before this panel on criminal justice reform began, former governor and presidential candidate Mike Huckabee was onstage accusing President Obama of lying about Benghazi and pronouncing that “the IRS is a criminal enterprise.”

But the panel was far more substantive. Texas Governor Rick Perry spoke at length about unnecessarily punitive mandatory minimum sentencing guidelines, as well as the wisdom of drug courts that divert addicts out of the penal system and into treatment. During his time as governor, Perry has become one of the more aggressive prison reformers in the country. In 2011, the state actually closed a prison because it couldn’t be filled thanks in large part to the declining incarceration rate. (Before Perry, George W. Bush oversaw the construction of thirty-eight new prisons.)

“You want to talk about real conservative governance? Shut prisons down. Save that money,” Perry said. “Stop the recidivism rates—lower them. That’s what can happen with these drug courts.”

Then there was former New York City Police Chief Bernie Kerik, who no doubt has a unique view on the criminal justice system: aside from being police chief and running Rikers Island, he also was incarcerated for three years on conspiracy and tax fraud charges.

Kerik spoke passionately about the number of people he met in federal prison who who were there for nonviolent drug offenses—people who got ten years for drugs “the weight of a nickel.”

“If somebody told me I would go to prison and meet some really good people, I would have laughed in their face. The reality is, I met some really good men. Decent men. Good fathers, good family men,” Kerik said.

“We’ve got to create alternatives, and we have to stop putting people in prison that don’t necessarily have to be there to learn their mistake,” he continued.

Given that it was of course a political conference, the anti-tax crusader and guardian of the Republican brand Grover Norquist was there to provide the political calculus behind passing real prison reform. His theory was straightforward: as a matter of political necessity, the effort had to be lead by conservatives.

“If I walked in and said ‘It’s a really good idea, they did this in Vermont.’ They’d laugh at you. Even if it was a good idea,” Norquist said, putting an emphasis on Vermont you imagine he also reserves for Venezuela. “Only coming from the right can serious criminal justice reform that saves taxpayer’s money, that saves American lives, [emerge].”

Norquist struggled to explain exactly why this was. He said conservatives had the right federalist approach by starting the reform movement in the states, but naturally state penal systems have to be reformed at that level, while the federal criminal code must be addressed by Congress.

The most Norquist could ultimately muster was an empty cheap shot: “Our friends on the left have zero credibility when it comes to focusing on reducing criminal activity, and punishing people who deserve to be punished.”

But, at heart, Norquist isn’t wrong on the strategy. Buy-in from the left and right is surely needed to enact real reform, and the CPAC panel reflected ongoing, noteworthy momentum on that front. Republicans aren’t just declining to criticize Democratic efforts at reform but trying to out-muscle them and claim the issue.

There were, of course, huge blind spots during the discussion. The all-white panel literally never mentioned racial disparities in sentencing—one of the most glaring injustices in America’s criminal justice system. The only glancing mention of race at all came when Kerik noted that “black kids with felony convictions” have a hard time re-entering society.

Rather, the unfairness of the criminal justice system was presented in a way that dovetailed with the more typical CPAC jeremiads.

Several panelists portrayed the federal prison system as full of people locked up because of over-burdensome regulations; Kerik mentioned two fellow prisoners who were there because they sold a whale’s tooth and some night vision goggles online. Nolan, the moderator, ticked off a list of hilariously esoteric crimes people are supposedly in prison for, like “inadvertently mislabeling a shipment of orchids” and “packaging lobster in plastic bags instead of cardboard.”

Nolan also suggested federal prosecutors had it in for conservatives (and perhaps white college athletes). “Think of the resources wasted on witch hunts against Dinesh D’Souza, Scooter Libby, the Duke Lacrosse team and Senator Ted Stevens,” he bemoaned.

Though the high number of nonviolent drug offenders was mentioned over and over again, nobody ever revealed that blacks make of 50 percent of state and local prisoners incarcerated for drug crimes, nor that black kids are ten times more likely than white kids to be picked up for drug offenses despite being less likely to use drugs.

The drug war couldn’t possibly be conceived as racially motivated—instead, the panelists had to cook up some extremely unusual reasons for why so many people were in jail for possessing trivial amounts of drugs. “For the bureaucrats, it’s easier to pick on these first-time offenders that are small cogs in the chain. Taking on a big kingpin means your family and you are threated by it, and unfortunately a lot of bureaucrats are afraid. And so they go after the numbers of small people,” said Nolan.

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The reforms pushed by the panel were limited in other ways, too. There was no small irony in having Rick Perry talk about criminal justice reform, since he has presided over more executions than any other figure in American history, including at the execution of at least one likely innocent man. Naturally, the death penalty never came up.

But perhaps one shouldn’t expect the CPAC set to talk in terms of the prison system as a new Jim Crow. Maybe it’s enough to just be heartened when a popular conservative like Perry says things like this: “The idea that we lock people up, throw them away, give them no chance at redemption, is not what America is about.”

That’s how he closed his remarks—well, right before launching into a non-sequitur about the Keystone XL pipeline and unfair federal taxes, almost as if he had to close on a note that reassured the audience he was still one of them.

Moments later, everything was back to normal. Ralph Reed was onstage noting gravely that “there is, in truth, a war on religion and a war on religious values being waged by this administration and their radical allies.” Then he went on to compare Obama to George Wallace.


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