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George Zornick

George Zornick

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

Building Infrastructure to Win Back the American Dream

As the Take Back the American Dream conference began in Washington this morning, there was a major announcement: the launch of the largest effort to date to recruit progressive candidates for office.

Progressive Majority, MoveOn.org, Democracy for America, USAction, People for the American Way and other groups will partner to identify the best progressive leaders to run for office, and then support the campaigns with strategic and messaging help. The project is called “Run for America.”

Local office recruitment is a crucial component of progressive electoral strategy. In the 2010 midterms, Republicans took 675 state legislative seats, which was the biggest gain any party made at the state level since 1938. The damage was seen almost immediately in places like Wisconsin, Ohio, Florida, Pennsylvania and elsewhere.

The effort dovetails nicely with the theme of this morning’s speeches. Former Labor Secretary Robert Reich, who as many people forget very nearly faced off against Mitt Romney in the 2002 Massachusetts gubernatorial race, urged attendees to “run, run, and run again.” (On his lost opportunity to run against Romney, Reich says: “I would have whipped his ass.”)

Reich said political involvement is the only antidote to far-right political domination. “The weapon they are using is demoralization and cynicism,” Reich said. “Their number one weapon is to discredit government, discredit the capacity of us working together through the institutions of government given to us by the Constitution and the Founding Fathers….because if people really believe nothing can change, and they can have no part in changing it, then that is a self-fulfilling prophecy.”

Van Jones used his keynote to outline the American Dream movement, which emphasizes grassroots involvement. Jones wasn’t afraid to say the Tea Party was an inspiration for the American Dream movement—Jones, too, envisions a decentralized, grassroots movement that will push politicians with their activism.

“We sat back and let the Washington DC crowd do the best they could without us,” Jones said. “Help is on the way.” The general planks of the movement are labor rights, racial justice, environmental protections, women's rights, LGBT rights and immigrant rights.

“We have been on a one-sided offensive in this country where the worst people in America with the worst ideas have dominated the discussion,” said Jones. “And I'm not mad at them. I'm not mad at the Tea Party. I'm not mad at them for being so loud. I'm mad at us for being so quiet.”

Jones says the nascent movement is already pushing an administration worried about re-election. “Why is the White House talking different? The White House is talking different because we are walking different,” he said. 

Can the Left Help Take Back the American Dream?

Fittingly, this year’s Take Back the American Dream Conference started off this morning with a live video link to the Occupy Wall Street protests in New York. The driving notion behind the annual event is to help develop a progressive movement to help push the political discussion leftward—and to push back against the Tea Party’s successful assault on regulation, fair taxation, and true jobs programs. The energy and frustration is there on Wall Street—and in Wisconsin, and Ohio—and the challenge is getting the political establishment to respond.

An Occupy Wall Street protestor in Boston told a reporter this weekend that “I’m fed up with politics. I’m tired of hearing campaign promises and getting the opposite. [I want] to bring attention to the fact that...you can influence politics at a grassroots level.” The conference wants to give that effort a name—the American Dream movement.

Robert Borosage of Campaign for America’s Future—which is running the event along with Van Jones’ “Rebuild the Dream” organization—quoted an old bit of George Carlin wisdom in his opening remarks this morning, and said that it’s called the American dream because for too many people, you have to be asleep to believe it. The conference is organizing behind an agenda that calls for jobs instead of cuts, curbing Wall Street’s excesses, protecting the social safety net, ending wars, creation of a green economy and investing in education.

Though there is a Democrat in the White House, progressives, particularly at the grassroots level, have been frustrated that many of these hopes have gone unfulfilled and in some cases not even pursued. E.J. Dionne, in a column titled “Can the left stage a Tea Party?” in this morning’s Washington Post, writes that the conference will “highlight a new effort to pursue the road not taken”:

What’s been missing in the Obama presidency is the productive interaction with outside groups that Franklin Roosevelt enjoyed with the labor movement and Lyndon B. Johnson with the civil rights movement. Both pushed FDR and LBJ in more progressive directions while also lending them support against their conservative adversaries.

The question for the left now, says Robert Borosage of the Campaign for America’s Future, is whether progressives can “establish independence and momentum” while also being able “to make a strategic voting choice.” The idea is not to pretend that Obama is as progressive as his core supporters want him to be but to rally support for him nonetheless as the man standing between the country and the right wing.

Over three days, Take Back the American Dream 2011 will share movement-building strategies to “map out a cross-country drive for economic revival.” Aside from the various workshops, highlights include a keynote speech from Robert Reich on job creation and an address from Representative Barney Frank about how to cut back military budgets. Nation editor Katrina vanden Heuvel will speak at an afternoon panel today on getting mainstream media attention to the movement. The conference culminates Wednesday with a march to Capitol Hill.

I’ll be blogging from the conference here, and posting additional updates on Twitter. You can watch major conference sessions at ourfuture.org/takeback, or check out the livestream below.

Forcing Secret Donors Into Daylight

Christine O’Donnell, the wacky Tea Party candidate for Senate in Delaware last fall, has done something wacky again. Perhaps that’s no longer news—but her latest chapter of head-slapping hypocrisy is a window into an increasingly fascinating fight over campaign finance and the shadowy groups that will play an enormous role in the upcoming elections.

First, the brazen and hilarious Christine O’Donnell episode that unfolded on Thursday.

Last fall, the watchdog group Citizens for Responsibility and Ethics in Washington (CREW) asked for a criminal investigation into O’Donnell’s misuse of campaign funds, alleging she was using them to pay personal expenses and then lying on her Federal Election Commission reports.

CREW was on pretty solid ground in asking for the investigation, as their main piece of evidence was the sworn affidavit of a former campaign worker who said O’Donnell was using campaign money to pay for rent, food, gas and even bowling outings, and then lying on her FEC reports.

The allegations, less than two months before the election, caused a media stir and led to an investigation by the US Attorney in Delaware, who ultimately didn’t pursue criminal charges but referred the case to the FEC.

This summer—only after the door had been closed on criminal charges, and incidentally at the same time O’Donnell had a book coming out—she started making noise about going after CREW.

Yesterday, her political action committee ChristinePAC launched a shiny new website asking followers to “Join the wrecking CREW” and help her battle the watchdog group. Specifically, she wants people to get behind an effort to strip CREW of its nonprofit status, since it so cruelly goes after good-hearted Republicans such as herself:

George Soros funded CREW, has dedicated their mission to WRECKING the campaigns and careers of many Republicans and Conservatives. It’s time the WRECKING BALL swung the other way….

Acting as a “charitable organization,” CREW is barred from intervening in political campaigns (“electioneering”) as well as participating in discriminatory activities. Assuming they are above the law, over a period of several election cycles, CREW has abused its tax-exempt status by blatantly acting on behalf of the Democratic Party as well as establishing a pattern of racially discriminatory activities.

Ms. Sloan’s leftist roots run deep as she’s worked for some of the most strident liberals in Congress, including Vice President Joe Biden and Sen. Chuck Schumer (D-NY)….When someone so blatantly breaks the law, as Melanie Sloan has, and wastes scarce government resources and tax payer dollars to carry out a political vendetta, she should face the consequences.

It’s worth noting that while CREW has criticized many Republicans, it has also tangled with the Obama administration over transparency, and that its annual list of the most corrupt members of Congress includes many Democrats.

But here’s the funny part: on its original FEC filings, ChristinePAC—which has $33,000 on hand, according to the FEC—listed its address as O’Donnell’s home, though it now appears to have been switched to a post office box. This raises the obvious question of whether she’s still personally profiting from her political fundraising. As the Sunlight Foundation noted earlier this year, “The big problem with [ChristinePAC] is that it looks very similar to the campaign that brought O’Donnell under federal investigation.”

So, yes: O’Donnell is launching an offensive against CREW for pointing out a campaign finance violation, using a new political group that is potentially still guilty of the same violation.

That insanity aside, O’Donnell is correct that 501(c)(4) charitable organizations get tax breaks that forbid them from intervening in political campaigns—and non-ridiculous challenges to abuse of that privilege are mounting.

Karl Rove’s Crossroads GPS, as well as the White House–allied Priorities USA, are 501(c)(4) organizations that are technically forbidden for electioneering. In order to preserve their tax status—and most importantly, to preserve the very light donor disclosure rules that apply to 501(c)(4) groups—they must have a primary purpose of promoting social welfare, not political influence.

This is what they claim—but if you honestly think Karl Rove, of all people, is going to spend $240 million next year and it won’t be political, there are plenty of bridge-related real estate brokers who would like your number. The same goes for PrioritiesUSA, which was formed by Obama administration officials soon after they left the White House.

Last year, Senator Dick Durbin asked the IRS to investigate Crossroads GPS’s tax status. And earlier this week, several campaign finance watchdog groups issued strong calls for the IRS to investigate not only Rove’s group but a whole slew of 501(c)(4)s that seem to be defying the letter of the law:

In a letter to the IRS, Democracy 21 and the Campaign Legal Center called for an investigation into four groups that have 501(c)(4) tax status and are engaged in political activity: Crossroads GPS, Priorities USA, American Action Network and Americans Elect.

“The IRS should conduct an investigation of whether each such organization has engaged in more than an insubstantial amount of non-exempt activity by participating or intervening in political campaigns, and accordingly is not primarily engaged in the promotion of social welfare,” the groups wrote in their letter. “The IRS should also conduct an investigation of whether each organization’s primary activity is campaign activity, and is accordingly not primarily engaged in the promotion of social welfare.”

The letter was signed by Fred Wertheimer, president of Democracy 21, and J. Gerald Herbert, executive director of the Campaign Legal Center.

This is a crucial line of attack in the war against unlimited, shadowy money. Again, it’s not the tax breaks that matter—Rove can afford that—but 501(c)(4)s don’t have to disclose much at all about their donors. If those groups lose that status, they would have to open up the books going forward.

It’s also much more effective to pursue a remedy through the IRS instead of the FEC, which even its own members call “feckless” and “toothless.” If the IRS takes a hard look at Crossroads GPS and similar groups, there could be a less secret money in next year’s elections. There’ s at least a chance the IRS might do so—I’d suggest looking at this ad—it just has to deal with Christine O’Donnell’s “wrecking crew” first.

Big Business: Undo the Damage of 'Citizens United'

Massive amounts of money will be spent to influence upcoming federal elections, and if recent history is any guide, at least half of it will be totally secret. We won’t know who donated the money, nor for what exact purpose. In 2010, political committees and organizations spent $298 million—four times what was spent in the 2006 midterms—and about 50 percent was undisclosed.

A report released Monday says this raging river of secret cash has the potential to create massive scandal and distort the democratic process, and it calls for complete transparency of political donations and public financing options for federal campaigns. That’s not a particularly remarkable conclusion, but what’s notable is who issued the report. 

Hidden Money: The Need for Transparency in Political Finance” was signed by thirty-two business leaders and university professors—including representatives from Citigroup, Prudential Financial and others. Executives from the pharmaceutical companies Pfizer and Merck helped promote the findings at a public event this week. 

The report enumerates some of the problems that post–Citizens United political money creates for large corporations:

The current state of campaign fundraising entails the inherent risk that companies, labor unions, and other organizations will be drawn into a political spending arms race, with no clear end in sight. Corporate resources that might be better spent investing in an enterprise or otherwise building shareholder value would then be diverted to political activities. As CED has noted before, a vibrant and strong economy results from business competition in the economic marketplace, not in the political arena. Unrestrained corporate political spending encourages the pursuit of particular policy or regulatory benefits that may not serve the public’s broad interests, or lead to political donations that are given with the intent of avoiding adverse consequences of legislative action. Donor influence also serves to undermine market forces by facilitating policies or regulatory requirements that diminish competition or unduly advantage particular firms or industries. Furthermore, the influence of money can sustain inefficient or outmoded businesses, thereby subverting and frustrating the creative innovation that encourages new investment, spurs business development, and keeps jobs and investment at home. [Emphases added.]

Stronger shareholder oversight of corporate political donations is needed, says the report, along with much tougher transparency enforcement by the Federal Elections Commission. “Transparency is an essential principle of free and competitive markets; it is equally important in a system of free and competitive elections. The use of hidden money in elections undermines First Amendment guarantees and is contrary to the basic values of our democracy,” it reads.

It’s truly remarkable that Citigroup and Pfizer—both heavy hitters in the political money game—have lent their names to such an effort and explained how unrestrained, secret spending is actually dangerous for their business and the marketplace.

A cynic might say that it’s exactly because Citigroup and Pfizer have for so long spent money in the open to influence politics, that they resent the new secrecy. You could read between the lines and reach that conclusion when the report says “every organization should be subject to the same rules and obligations to make their campaign finances transparent.”

But the report not only calls for transparency but much less corporate influence overall—not only to stop a political spending "arms race," but to improve democracy. The authors advocate public financing of federal elections, in the form of multiple dollar matches for small individual contributions. The report says this will “free [candidates] of the need to be beholden to large donors and special interests.”

Unfortunately, this rather dramatic statement from big businesses has gone virtually unnoticed in the mainstream press. But it’s a crucial point that should be a part of any campaign finance discussion—by their own admission, corporations can also be hurt by unrestrained, secret spending. 

Beltway Buzzes About Coca-Cola's Bogus Tax Complaint

According to Mike Allen’s “Playbook”—a daily memo of DC conventional wisdom—the biggest story of the day involves remarks by the CEO of Coca-Cola about the horrid US tax structure. Mukhtar Kent says that his company finds it easier to do business with China and Brazil than the United States because of our antiquated and unfair tax code:

“They’re learning very fast, these countries,” he said. “In the west, we’re forgetting what really worked 20 years ago. In China and other markets around the world, you see the kind of attention to detail about how business works and how business creates employment.”

“I believe the U.S. owes itself to create a 21st century tax policy for individuals as well as businesses,” he said. Mr. Kent, speaking on the sidelines of the Clinton Global Initiative conference, hit out specifically at US provisions that tax companies for repatriating cash earned overseas. Coke does not disclose how much cash it holds overseas.

“If you talk about an American company doing business in the world today with its Chinese, Russian, European or Japanese counterparts, of course we’re disadvantaged,” Mr. Kent said. “A Chinese or Swiss company can do whatever its wants with those funds [earned overseas]. When we want to bring them back, we are faced with a very large tax burden.”

Allen breaks his supposed journalistic objectivity for a moment, and dubs this plea for lower corporate tax rates a “chilling story” that will “drive debate for ’12 and SuperCommittee.” He adds that “This is a massive wakeup call for official Washington…. The Coke dude’s sentiments, which we hear CONSTANTLY and CONSISTENTLY from executives around the country, explain why an independent presidential candidate could have historic support, and why big money is panting after New Jersey Gov. Chris Christie.” (Emphasis is his).

Indeed, Republicans are already seizing on Kent’s comments. Virginia Governor Bob McDonnell, who is rumored to be on many a vice-presidential short list, said today that he was “staggered” by Kent’s comments, and echoing Allen, said it should be a “wakeup call” to Washington.

This is shaping up to be a major talking point for lowering corporate tax burdens, akin to the Democrats’ promotion of Warren Buffett’s pro-tax position. So it’s very important to get this straight: in virtually every way, it’s ludicrous to listen to what the CEO of Coca-Cola has to say about federal taxes.

For one thing, Coca-Cola enjoys very low federal taxes, and pays a lower rate than most Americans. According to Citizens for Tax Justice, the company’s current federal tax expense is $470 million, which is only 6.5 percent of the $7.2 billion in pre-tax profits that Coca-Cola reported last year. That’s a pretty rosy rate, and certainly does call for a retooling of the tax code—though not in the way Mukhtar Kent wants. (The company told CTJ they actually paid at a 38 percent rate, but would not release any documentation).

Part of the reason that Coca-Cola pays such a low rate is that it parks profits in overseas tax havens like the Cayman Islands. The company has saved $500 billion in some years by hiding profits there.

These overseas profits actually get to the heart of what Kent is after—he mentions that Coca-Cola cannot bring those profits back without a “very large tax burden.”

The repatriation of overseas earnings is a big issue for multinational corporations based in America—if they want to bring back profits made overseas, they must pay the standard 35 percent tax rate. In 2004, big business got Congress to approve a repatriation holiday in which overseas profits could be brought back and taxed at a 5.25 percent taxation instead of 35 percent. It was sold as a jobs-creating measure: companies would bring back a lot of overseas money, which would spur investment here and jobs here.

A lot of overseas profits came back, but unfortunately—yet predictably—the jobs never materialized. The Congressional Research Service later found “little evidence exists that new investment was spurred.” In fact, a comprehensive study found that 92 percent of the money that was brought back was used to enrich shareholders and executives.

Moreover, many of the companies that participated in the repatriation ended up laying off workers in the following months and years. On top of that, many of these companies—including Coca-Cola—now have much more money parked overseas than they did before the repatriation holiday. Coca-Cola repatriated $6.1 billion of the $9.8 billion it had in overseas profits in 2004—but today, the company has $20.8 billion parked overseas, more than triple that amount.

So, what Muhktar Kent is really saying: though his highly profitable company’s already-low federal tax rate is abetted by hiding profits overseas, he’d like to bring back those profits at an outrageously low rate so that his company can get even richer. Otherwise they’ll keep the money in China, or Brazil, or wherever. That’s fine for Kent—it will certainly help his shareholders, which is his only true motivation. Just don’t tell Mike Allen.

Government Shutdown Averted—Again

Government shutdowns are starting to become almost natural in Washington: the seasons change, and fiscal hardliners in the House of Representatives find a new way to endanger the federal government’s operations.

In the spring, government doors from DC to the Grand Canyon National Park were hours away from closing because of a funding dispute, which was averted with an agreement to cut $38 billion from the federal budget for the rest of the fiscal year. In the summer, the US Treasury came perilously close to hitting the debt-limit before reaching an agreement that called for $2.4 trillion in cuts and a super-committee on deficit reduction.

Over the past several weeks, it seemed like the autumnal shutdown would be over another funding resolution that would also give extra money to the Federal Emergency Management Agency. But the crisis was averted in a deal struck last night that was unlike any yet this year—in this case, the Democrats actually stood their ground and (mostly) won.

So what happened? In short: the April deal extended government funding through the end of the fiscal year, which is Friday. Congress has not yet passed the twelve appropriations bills needed to fund the government for another fiscal year, in large part due to uncertainty about what the super-committee might decide on cuts, and so both parties quietly agreed to pass a “continuing resolution” that would provide money for the government until November.

This continuing resolution wasn’t supposed to be controversial, but Hurricane Irene changed all of that. FEMA spent a lot of extra money to respond to the destruction that stretched across much of the eastern seaboard, and began informing Congress that it could run out of money before the end of the fiscal year—meaning that it would need excess funds.

Suddenly, the House Republican leadership made a radical demand: any extra disaster funding for FEMA would have to be offset by additional cuts elsewhere. Representative Eric Cantor, the House majority leader and close ally of Tea Partiers in the House, led this charge. As I noted on Friday, this was a remarkable line to draw—Republicans were proudly returning to the mindset that federal disaster response was something of a boondoggle, a frame of thinking that led pretty directly to the atrocious response to Hurricane Katrina in 2005. (This was underscored by the fact that none other than Michael “Heckuva Job” Brown endorsed the Republican position.)

But Senate majority leader Harry Reid refused to back down, and repeatedly said disaster funding should always be passed with no strings attached. Reid said plainly that if the House Republicans didn’t acquiesce, there would be a shutdown and it would be their fault. “I’m not that sure [there won’t be a shutdown], because the Tea Party-driven House of Representatives has been so unreasonable in the past. I don’t know why they should suddenly be reasonable,” Reid said.

Nevertheless, the House passed a bill with deep offsetting cuts last week, after an embarrassing sideshow in which Boehner lost a vote on a bill that apparently didn’t cut enough for the Tea Party—he had to try again with another bill that had even deeper cuts.

In addition to Boehner’s display of incompetence, this was very shaky political ground in appearing to play politics with disaster funding. There were a number of reasons they must have been nervous about their position, all of which Reid had to know:

  • Polls showed rapidly eroding public support for Republicans’ deficit stance, which was the driving principle behind the standoff. There is also disgust with the rancor in Congress, with even Republican leaders admitting people are fed up with constant standoffs and disputes.

  • Flood victims were becoming increasingly angry that help might be delayed by theatrics on the deficit. The storm impacted electorally valuable states like Pennsylvania, Virginia, and North Carolina.

  • Republicans inside and outside of Congress began breaking with the strategy: Tea Party favorite and presidential candidate Herman Cain said FEMA should be funded immediately and Congress should worry about offsets later. Star governor Chris Christie also agreed. Fox News didn’t go into overdrive with the issue as it did with the debt ceiling fight and April budget standoff.

At this time yesterday, it seemed we were headed for a shutdown—neither side was going to back away. But then some accounting math saved the day. FEMA said that it could operate through Friday, the end of the fiscal year, meaning a continuing resolution would not have to contain extra money for FEMA. So the issue of offsets became irrelevant. Yesterday the Senate passed a straightforward bill funding the government until November, with no offsets for the money appropriated to FEMA, and the House is expected to rubber-stamp it on Thursday.

In many senses, this was a win for Democrats—they pledged that FEMA money shouldn’t and wouldn’t be offset with budget cuts, and it wasn’t. House Republicans could still insist on offsets even in this bill, but they won’t. FEMA will receive less money than was in the original, Democratic Senate bill, but that’s a level that will only exist for six weeks, until this resolution runs out in six weeks.

Reid’s hard-line means it’s no longer a given that the party will bow to Tea Partiers in the House at the 11th hour. That’s encouraging—because this wasn’t the last stare-down. In November, there’s another funding bill to fight over.

The Funding Standoff and the GOP's Refusal to Learn From Hurricane Katrina

Sometime next week, the Federal Emergency Management Agency will officially run out of money if Congress doesn’t act. Unprecedented demands and gamesmanship by Republicans in the House of Representatives are threatening a funding bill for the agency, along with disaster relief for Americans affected by the recent hurricanes. Watching the spectacle unfold, it’s impossible not to marvel at short Republican memories—it wasn’t that long ago that playing politics with FEMA proved disastrous for the GOP.

By many accounts, the federal government’s failure to respond to Hurricane Katrina’s devastation of New Orleans was a turning point in George W. Bush’s presidency. His administration was shown to be incapable of even basic functions of government—helping desperate citizens in desperate need following a natural disaster. After they left the White House, several Bush aides acknowledged that this was the moment that the Bush presidency was irredeemably lost:

Dan Bartlett, White House communications director and later counselor to the president: Politically, it was the final nail in the coffin.

Matthew Dowd, Bush’s pollster and chief strategist for the 2004 presidential campaign: Katrina to me was the tipping point. The president broke his bond with the public. Once that bond was broken, he no longer had the capacity to talk to the American public. State of the Union addresses? It didn’t matter. Legislative initiatives? It didn’t matter. P.R.? It didn’t matter. Travel? It didn’t matter. I knew when Katrina—I was like, man, you know, this is it, man. We’re done.

 

In the weeks and months after the disaster, FEMA and Bush’s appointee to lead it, Michael Brown, quickly became the focal point of the botched administration response. Brown was the former head of the International Arabian Horse Association before coming to the agency, which needless to say didn’t give him much experience in dealing with natural disaster response. But he was a close ally to Bush during his political career, and that’s what counted.

It turned out that FEMA had been hollowed out as part of deliberate strategy—one based on the conservative philosophy that the federal government simply shouldn’t have a large role in people’s lives, even if it meant rescuing those lives from disaster. Bush’s first appointee to head FEMA, Joe Allbaugh, told the Senate during his confirmation process that “Many are concerned that federal disaster assistance may have evolved into both an oversized entitlement program and a disincentive to effective state and local risk management…. Expectations of when the federal government should be involved and the degree of involvement may have ballooned beyond what is an appropriate level.” As the years went on, career FEMA employees complained that “our professional staff are being systematically replaced by politically connected novices and contractors.” The deliberate neglect culminated in Brown’s appointment, followed by hundreds and hundreds of potentially unnecessary deaths in a major American city.

This anti–federal government philosophy led to both a human and political disaster. Yet today, Republicans in the House of Representatives are less than seventy-two hours away from leaving FEMA without any money to operate as they continue a crusade against federal spending.

When Hurricane Irene walloped twelve states in late August, FEMA took emergency measures to divert funding from many other projects to respond to the destruction. Now, the agency has only $215 million on hand, which is far below the $1 billion the agency wants to have access to at all times in case disaster should strike again. It could completely run out of money as soon as Monday.

Over the past couple of weeks, a non-controversial bill to extend government funding through mid-November suddenly heated up when Republicans refused to allow the additional FEMA funding without also including offsetting cuts from other programs, which is an unprecedented move—there has generally always been bipartisan agreement on providing immediate disaster aid. But Republicans passed a bill last night that offsets some of the disaster aid with $1.5 billion in cuts from a loan program for energy efficient vehicle production, along with rescinding $100 million in loans to the scandal-plagued company Solyndra.

The Senate has already passed—with the help of ten Republicans—a bill that provides the disaster relief with no strings attached, and majority leader Harry Reid has already pledged to kill the House bill.

House Republicans knew the Senate would not accept their bill, but are intent on catering to the hardline fiscal conservatives. “Change like this is hard,” House majority leader Eric Cantor defiantly said Wednesday. “We’ll find a way forward so that we can reflect expectations that taxpayers have that we are going to begin to start spending their money more prudently.”

Clearly, Republicans don’t find it “prudent” to ensure money for fundamental government functions like helping citizens after natural disasters. As Ben Adler has noted, the GOP candidates running for president show a similar contempt for the role of the federal government. The party was bitten badly by this philosophy once before—but clearly they drew no lessons from it.

Rally on Capitol Hill: 'Medicaid Matters'

Today on Capitol Hill, Senators Bernie Sanders and Tom Harkin, along with Representative Dennis Kucinich and other legislators, addressed a rally aimed at persuading Congress and President Obama to protect Medicaid in the upcoming deficit and budget deals.

The deficit reduction package touted by President Obama this week would cut more than $72 billion from Medicaid, and the super-committee and Republicans in the House might choose to go much further. The rally had a particular emphasis on the effect of cuts on people with disablities, 8 million of whom rely on Medicaid. It was led by the disability rights group ADAPT and had more than ninety cosponsors, ranging from the AARP and Families USA to the SEIU.

Nation DC intern Cal Colgan was there and filmed this video:

Medicaid operates on such slim margins that cuts of almost any magnitude hurt recipients. “The Medicaid cuts in the president’s proposal shift the burden to states and ultimately onto the shoulders of seniors, people with disabilities and low-income families who depend on the program as their lifeline,” Ronald F. Pollack, executive director of Families USA, told the New York Times today.

More information on local rallies for the same cause can be found here

Opposition to Keystone XL Mounts—Along With Safety Questions

The arrests outside the White House may have ended, but the pressure to stop President Obama from approving the Keystone XL pipeline continues to build. Yesterday, the challenge came from within his own party: seven Democratic National Committee members signed a resolution urging Obama to reject the pipeline deal.

The document, authored by Maryland state legislator and DNC member Heather Mizeur, says that “by denying the permit for the Keystone XL pipeline, President Obama would enhance national security, advance job creation in the new ‘green economy,’ improve public health, and take a positive stand for addressing climate change concerns.” Representative Mike Honda is one of the other six signers.

The DNC members aren’t the only members of the party to urge Obama to say no: Senator Patrick Leahy, along with Representatives Peter Welch and Steve Cohen, have also publicly opposed the pipeline. Independent Senator Bernie Sanders also opposes the project, and even a Republican Senator, Mike Johanns of Nebraska, has come out against the project, as has the Republican governor of that state.

Meanwhile, the National Resources Defense Council (NRDC) has compiled a powerful research document that challenges many of the claims made by TransCanada and the US State Department about tough regulatory oversight of the project.

The State Department report that gave the Keystone XL pipeline a passing environmental grade repeatedly referenced new regulations from the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration that govern pipeline transport of heavy crude oil—the type of oil that will be flowing through the Keystone XL pipeline, and which regulators don’t have much experience with.

But the NRDC found that the new regulations governing heavy crude aren’t all that rigorous. In fact, only twelve of the fifty-seven “new” rules actually differ from existing minimum requirements for pipeline safety. In some cases, the regulations were just reworded with no substantial difference. “This is one of the many examples of the State Department and TransCanada playing a shell game to avoid addressing the legitimate safety concerns that the American public has with the Keystone XL,” the study’s author said.

SEC Launches Major Investigation Into S&P Downgrade

According to the Wall Street Journal, the Securities and Exchange Commission has opened an explosive investigation into insider trading around Standard & Poor’s downgrade of the federal government in August. This adds a whole pile of questions to an already questionable episode.

The SEC is examining specific trades that bet against the stock market and were made right before Standard & Poor’s issued the downgrade. The market lost 634.76 points after the announcement, a 5.5 percent drop—this would have produced an enormous windfall for those traders.

Sources told the Journal that “unusually broad” subpoenas have been issued to some hedge funds, trading shops, and other Wall Street outfits asking for information about certain trades. The SEC wants to know who made the trades, who was the first to hear about the Standard & Poor’s downgrade, and whom they heard it from.

In addition, it’s possible that Standard & Poor’s itself has been subpoenaed. Any leaks would logically have come from either the company or the Treasury Department, which was alerted to the move. Sources told the Journal that, at the very least, the SEC has asked Standard & Poor’s to disclose which employees knew about the looming downgrade—and a spokesperson for Standard & Poor’s would not comment on whether they received a subpoena.

While it’s conceivable a Treasury Department official tipped off some Wall Street traders about the downgrade, Standard & Poor’s has a well-known and comfy relationship with Wall Street—which pays the company’s fees—and this might make it a more likely suspect.

The Journal notes that Standard & Poor’s met with large bond investors in the weeks leading up to the downgrade, and some of those investors are not commenting on whether they’ve received subpoenas:

The bond investors included Allianz SE’s Pacific Investment Management Co., Los Angeles-based TCW Group Inc., Legg Mason Inc.’s Western Asset Management and New York asset-management giant BlackRock Inc., according to people familiar with the matter.

It couldn’t be determined Monday if any of those firms was subpoenaed by the SEC. A spokesman for TCW Group said Monday the firm hasn’t received a subpoena. Western Asset Management hasn’t received a subpoena, wrote Stephen Walsh, the firm’s chief investment officer, in an email. A BlackRock spokesman declined to comment. A spokesman for Pacific Investment Management didn’t respond to a request for comment.

The case will be hard for the SEC to prove—it must establish a direct leak that resulted in a trade. But the probe comes at a very perilous time for Standard & Poor’s and other private rating agencies. As I noted last week, the SEC is in the midst of drawing up new guidelines mandated by the Dodd-Frank financial reforms that could seriously curtail the power and profitability of the rating agencies.

The new rules could potentially be very tough and change the entire business model, or might end up being soft, and change very little. If Standard & Poor’s officials end up in a courtroom over one of the company’s most high-profile downgrades, further underlining a relationship with Wall Street that many regulators already find too cozy, the former becomes much more likely.

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