George Zornick | The Nation
The Paid Sick Leave Battle Widens in the States
Sangita Nayak of 9to5 speaks at a petition hand-in, Milwaukee City Hall, June 2008. (Flickr/Dave Moore)
In recent months, more and more cities and states are requiring that employers give paid sick leave to their workers. It’s a broadly popular policy, and a necessary one—one in three American workers has no guarantee of being paid during an illness, including only 25 percent of part-time workers. Aside from creating even more economic vulnerability for workers, this can greatly increase the spread of seasonal flus, which costs businesses $10.4 billion every year, according to the CDC.
Like so many other issues, mandatory paid sick leave has been jammed up in Washington by big-business interests: Obama supported a 2009 Democratic bill in Congress that would have guaranteed workers at least seven paid sick days per year at companies with 15 or more employees. That measure was suffocated by Republicans, and opposed by groups like the National Federation of Independent Business.
So local governments have turned to just passing laws on their own, and made an impressive amount of progress. But a rising tide of conservative pushback legislation might turn the tables on one of the too-rare areas of progressive progress at the state level.
There is already some ground to build on: In 2007, San Francisco began mandating paid sick leave and the District of Columbia adopted a paid sick leave policy in 2008. Seattle began a paid sick leave policy in 2011, and later that year Connecticut passed a measure requiring up to five sick days per year depending on how many hours were worked, making it the first state in the nation to adopt such a policy. Non-union hotel workers in Long Beach, California, won similar benefits via referendum last fall.
Now, the 2013 legislative year has brought the battle to many more major cities. Paid sick leave has become a central issue on the New York City Council, and by extension the looming mayoral race—many liberals see it as a litmus test for council president Christine Quinn. (Gloria Steinem, for example, is withholding her endorsement until she sees what Quinn does.)
Thursday night in Portland, Oregon, the city council scheduled a vote on a paid sick leave policy, and Philadelphia’s city council is holding hearings this week as well. (Philadelphia is trying to expand an existing law paid sick leave law.)
At the state level, Maryland and Massachusetts are both considering bills, as is Vermont (which would also guarantee paid sick leave if a relative or loved one is ill), and Washington State.
As proponents of paid sick leave make headway at the local level, business interests are pushing back—using an interesting strategy of pushing legislation through statehouses that pre-empts any local sick-leave ordinances. In other words, the state-level bills would make it illegal for cities or towns to pass sick-leave bills, and would negate any on the books. (This is a tactic also used by gun-rights legislators; for example, in Colorado, the state legislature barred cities from passing any gun-control measures stricter than existing state law.)
Earlier this month, a Democratic member of the state legislature in Washington and five of his Republican colleagues proposed a bill that would negate Seattle’s paid sick leave law, which passed the city council 8-1. The proposed legislation says:
The state of Washington hereby occupies and pre-empts the entire field regarding paid sick leave and paid safe leave regulation for private employers within the boundaries of the state. Local laws and ordinances that require or regulate paid sick leave or paid safe leave in excess of standards adopted by the state shall not be enacted and are pre-empted and unenforceable, regardless of the nature of the code, charter, or home rule status of such city, code city, town, or county.
In Florida, where there was a battle to get paid sick leave on the ballot in Orlando this past fall, a state senator has introduced a similar bill that “preemp[s] regulation of family or 7 medical leave benefits to the state.”
The state House in Mississippi already passed a pre-emption bill this year, which reads:
An act to prohibit a county, board of supervisors of a county, municipality or governing authority of a municipality from establishing a mandatory, minimum living wage rate, minimum number of vacation or sick days, that would regulate how a private employer pays its employees; to provide that the legislature finds that these prohibitions are necessary to ensure an economic climate conducive to new business development and job growth in the state of Mississippi;
A “statewide uniformity” bill has also been introduced in the Michigan legislature.
The proponents of such legislation make basic arguments about normalizing economic policy across the state, but it’s a little hard to argue. If a city wants to mandate paid sick leave, why not? If one accepts the argument it will chase business from the city, they would be likely to go to a neighboring municipality so it can serve the same customer base. So what’s the difference to the state?
Local organizers see it rather as a coordinated business campaign. Stephanie Porta, director of Organize Now in Florida, has been battling to get paid sick leave on the ballot in Orlando, where pushback from major corporations like Disney, Universal Studios and many major hotel chains has been immense. “All of their top priority legislative issues this year…is to pre-empt sick time,” Porta said. “It seems like it’s very much organized from a national level.”
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It’s hard to say whether the legislation is nationally coordinated. It is certain, as Pat Caldwell reported in great detail this week in The American Prospect, that at the state level, conservative and often business-friendly think tanks are far outpacing progressive counterparts. It could just be that “good” ideas to block paid sick leave are circulating in conservative circles.
If the pre-emption legislation is coordinated nationally, one would immediately think of the American Legislative Exchange Council (ALEC). But it’s hard to pinpoint if they’re actually involved at all—and they deny it entirely.
ALEC has focused on this issue in the past, that much we know. The Center for Media and Democracy obtained ALEC meeting minutes in 2011 that showed members were quite interested in blocking municipal paid sick leave, after Scott Walker backed a pre-emption bill in Wisconsin that year:
Paid family medical leave” was the only topic of discussion by the Labor and Business Regulation Subcommittee of the Commerce, Insurance and Economic Development Task Force, according to the meeting minutes.
Meeting attendees were given complete copies of Wisconsin’s 2011 Senate Bill 23 (now Wisconsin Act 16), as a model for state override. They were also handed a target list and map of state and local paid sick leave policies prepared by ALEC member, the National Restaurant Association. In Wisconsin, the Wisconsin Restaurant Association lobbied for SB 23 to repeal the sick leave ordinance, as did the the Metropolitan Milwaukee Association of Commerce (MMAC), the local branch of the the U.S. Chamber of Commerce, an ALEC member. The effect of the repeal will be more sick workers at work, making others ill, in order to save or increase profits by corporations.
Indeed, a review of the state-level legislation in Florida, Washington, Mississippi and Michigan that appeared in 2013 shows that at least one sponsor—and in many cases, multiple sponsors—are members of ALEC.
But several sponsors of pre-emption bills, including the lead sponsor of the Washington legislation, are not members. It stands to reason that conservative lawmakers who oppose paid sick leave laws would incidentally be members of ALEC. In addition, the legislative language is not the same across states, as has often been the case with ALEC-led efforts. And ALEC explicitly denied involvement to The Nation.
“The American Legislative Exchange Council has no model policy on paid or unpaid sick leave, and we are not engaged in any educational activities around sick leave in any state,” said Bill Meierling, senior director of ALEC’s public affairs. “I understand that at some point a member offered an academic presentation about sick leave standards, but that was the extent of Council engagement.”
In any case, watch state legislatures this year. There are sure to be intense battles over paid sick leave—both enacting it for the entire state, and preventing everyone in the state from enjoying that privilege, even if their city has passed it.
As the fight for paid sick leave rolls on, employers are pushing for shady “wellness” schemes. Read Steve Early’s analysis.
Beware Obama's Dealmaking
Barack Obama and House Speaker John Boehner. (AP Photo/Pablo Martinez Monsivais.)
As sequestration churns on, President Obama is reaching out to moderate Republican members of the Senate to see if he can still put a deal together. He is coming to the Hill next week for a Republican luncheon, and hosting other members for dinner tonight. The president is also picking up the phone. “He just called me,” Senator Lindsey Graham told reporters yesterday. “What I see from the president is probably the most encouraging engagement on a big issue that I’ve seen since the early years of his presidency. He wants to do the big deal.”
This should, and does, worry progressives inside and outside of Congress. The default position among center-left pundits is that if Obama gets Republicans to agree on a grand deficit reduction package that includes new revenue, he’s “won.” But that assumption really needs to be interrogated, and each concession examined.
Sequestration is a terrible policy; the cuts will touch a number of vital government functions and inflict unnecessary pain on many Americans. But here’s what Obama is proposing: an unbalanced package of $930 billion in cuts and $580 billion in revenue, with an additional $100 billion in deficit reduction through Chained CPI. This is the formula that would cut Social Security benefits $1,000 per year for some seniors and take $1,400 per year from disabled veterans.
Is that truly better? The sequestration cuts are damaging, but money taken away can always be restored later. (In this case it would involve scrapping the Budget Control Act, which is no doubt more difficult.) Chained CPI, however, permanently cuts the safety net, and that’s much harder to ever undo—and the fact that a Democratic president did it opens the door to even more cuts down the road.
It also presents serious political risks for the Democratic Party. Obama is currently being blamed by Republicans and many in the media for the idea of sequestration, as he was blamed relentlessly during the 2012 campaign for the $700 billion Medicare cuts—both things he ostensibly proposed to appease Republicans. He will almost certainly be blamed for cutting Social Security as well if his plan is enacted.
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A very telling phone call came in to CSPAN’s Washington Journal this morning, during conservative GOP Representative Lynn Westmoreland’s appearance. A Republican caller from West Virginia begged Westmoreland to hold firm on the spending cuts, criticized the idea of government handouts, but then specifically blasted “the chained CPI that the president wants”:
I hope Republicans do the right thing, take care of the people—you know who we are. And I don’t want anything from the government, I’ve been working all my life and so has my entire family, so I hope that you guys stick to your guns, no matter what the cost, and please bring us back from the brink of disaster. And don’t set up that CPI, that chained CPI that the president wants. And would you explain the Chained CPI a little bit?
There’s a reason Republicans haven’t actually staked out and named entitlement cuts they want in this debate. Cutting Social Security is not popular, even among Republicans. You can bet your last dollar they’ll blame Obama for cutting Social Security during the 2014 midterms if his plan passes.
There is, of course, a great deal of doubt that it would ever pass. Even if Republicans agree to a grand deficit reduction package, which at least in the House seems unlikely, Obama still has to deal with Democrats. Note that the Democratic sequester replacement bill in the Senate contained an even split between new revenue and cuts, and no Chained CPI. The AFL-CIO supported it for this reason: “Although it would not repeal sequestration, it would minimize harm to the economy and would not cut Social Security, Medicaid or Medicare benefits.”
In the House, where significant Democrats might be needed to pass any sort of deal with Obama, resistance is strong to benefit cuts as well. The Congressional Progressive Caucus has long opposed them, and today Representatives Alan Grayson and Mark Tanako are asking colleagues to sign a letter pledging to vote against any cuts to the safety net. They are also holding a call with activists via the Progressive Change Campaign Committee.
Grayson predicted this week that “if they go through with cuts, you’ll see people pouring into the streets. Pouring into the streets of Washington, DC, and every other capital, state capital and major city in the country.” That’s probably a bit hyperbolic, but there is significant reason to be worried about Obama’s dealmaking on the sequester.
Barack Obama may be wrong on the sequester deal, but he’s right on his nomination for EPA director, George Zornick writes.
Obama Makes a Strong Choice to Head the EPA
Gina McCarthy speaks at a climate workshop sponsored by The Climate Center at Georgetown University, Thursday, February 21, 2013, in Washington. (AP Photo/Alex Brandon)
There are three basic things one would hope to see in the White House’s nominee for the Environmental Protection Agency. He or she should possess a big, ambitious vision for combating climate change; he or she should have federal rule-making experience, since that’s the administration’s only real hope for getting things accomplished in that area; and he or she should be able to get confirmed by the US Senate.
At first blush, Obama’s selection of Gina McCarthy seems to clearly check each box. (That she contributes to the cabinet’s gender diversity is even better.) Here’s why:
She constructed or played a role in several pioneering cap-and-trade initiatives.
McCarthy spent most of her early career in Massachusetts, eventually becoming a top environmental official for none other than Mitt Romney. She commanded the development of Romney’s “Climate Action Plan” for the state, which aimed to reduce greenhouse gas emissions to ambitiously low levels: Enacted in Spring 2004, it aimed to reduce the state’s GHG emissions 10 percent below 1990 levels by 2020. The plan called for creating an “emissions banking and trading program,” as well as using regulations to limit emissions from older, dirty power plants.
The plan also called for Massachusetts to participate in a regional cap-and-trade plan with other states, something Romney pulled out of just before implementation in response to pressure from the industry and his political aides, who were eyeing a presidential run. But McCarthy quickly found a job in neighboring Connecticut, and oversaw that state’s participation in the regional cap-and-trade exchange and continued to help the multi-state initiative reach fruition.
At Obama’s EPA, McCarthy oversaw the clean-air rulemaking process.
Though Lisa Jackson headed the EPA and took a lot of heat from Republicans over new regulations, it was McCarthy who was doing much of the “heavy lifting,” according to the National Journal in 2011, “playing a key role in the march of environmental regulations to fight climate change and slash pollution from coal-fired power plants.”
Federal rulemaking is a complicated, grueling process, and so this experience is no doubt helpful—especially since the chance of Congress passing any climate legislation is vanishingly small. The EPA will be the nexus of the Obama administration’s climate efforts, and rulemaking will have to be the tool. From big things like EPA regulation of greenhouse gases to a variety of smaller but still very important matters like emissions from industrial boilers, sulfur in gasoline, coal ash disposal, soot, and water pollution, the EPA will have its hands full.
McCarthy already passed Senate confirmation once.
Republicans are well aware that the EPA will take the lead in the administration’s climate initiatives, and are certain to battle the EPA nominee regardless of who it is. McCarthy will no doubt face stiff opposition. But insofar as a nominee can be resistant to GOP opposition (and still be a strong pro-environmental choice), McCarthy fits the bill.
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Aside from having worked under the GOP’s last nominee for president, McCarthy already passed Senate confirmation for her current post in 2009, which raises the bar for Republicans that want to find a reason to filibuster her. (To be sure, they’ll find one; David Vitter, the ranking Republican on the Senate Environment and Public Works Committee, has already been targeting McCarthy for allegedly not fully disclosing the scientific data behind recent EPA decisions.)
But still, if McCarthy was acceptable in 2009, why not now? Even Senator James Inhofe, a climate-denier extraordinaire, supported her nomination, and as Rebecca Leber at ThinkProgress catalogues, an impressive number of industry groups have positive things to say about McCarthy.
Ultimately, this is a very strong nomination from the White House. McCarthy isn’t perfect—to the extent one wants to credit her with EPA rulemaking success over the past four years, she must also be blamed for its shortcomings—but she satisfies a number of crucial requirements and has the strong support of environmentalists in Washington. Senator Barbara Boxer made it clear long before the McCarthy’s nomination that she was the senator’s preferred candidate. Major environmental groups have offered unqualified support. A tough confirmation fight and far, far tougher rulemaking battles await, but this is a good first step.
In worse news on climate change, the State Department's falseheaded review of the Keystone pipeline's environmental impact is another step toward its approval, George Zornick writes.
State Department Report Paves the Way for Keystone Approval
The State Department released its initial reassessment of the environmental impact of constructing the Keystone XL pipeline late Friday—and the document quickly enraged environmentalists and seemed to buttress the arguments of pipeline proponents.
Since it’s a draft, the report made no recommendation one way or the other on building the pipeline. But it raised no major environmental concerns with doing so. This is the key paragraph:
Based on information and analysis about the North American crude transport infrastructure (particularly the proven ability of rail to transport substantial quantities of crude oil profitably under current market conditions, and to add capacity relatively rapidly) and the global crude oil market, the draft Supplemental EIS concludes that approval or denial of the proposed Project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area.
In other words, the State Department believes the Keystone pipeline won’t have any real effect on how much tar sands oil is ultimately refined and brought to market, and thus, that it will have no substantial impact on climate change. Specifically, the report says blocking the pipeline would only lessen emissions by 0.07 to 5.3 million metric tons of carbon dioxide by 2030. For context, in 2010 the United States emitted 6,821.8 million metric tons of carbon dioxide in 2010.
Environmentalists hotly contest this claim, with a considerable amount of data on their side.
There are an estimated 240 gigatons of carbon stored in the tar sands, which is half of what scientists estimate is needed to avert more than 2 degrees of global warming. Releasing it is the equivalent of adding 4 million cars to the road. If you read the State Department report closely they are not really debating that, but rather contending that the oil will be extracted one way or another, so building the pipeline makes no real difference in the end.
This just isn’t true: for one, the industry itself has repeatedly said that building the pipeline would indeed expand tar sand drilling. The State Department asserted in the report that railways could be used to transport the tar sands oil absent any pipelines, but that’s quite debatable: only 0.69 percent of western Canada’s oil moved by rail in 2011 and there’s a continent-wide shortage of rail cars.
Activists blasted this line of reasoning as soon as the draft was released. “The State Department’s environmental assessment is a vehicle for the White House to test the waters to see if the public will buy its false and cynical argument that the Canadian Tar Sands are going to get burned anyway, and so the government’s chief climate scientist’s assertion that Keystone XL will spell ‘game over’ for the climate may be true but is essentially irrelevant,” said Becky Bond, political director at CREDO. “This is a coward’s logic—that we should let the bankers and the oil companies profit while the planet inevitably burns.”
The country’s largest environmental groups also strongly criticized the report. “We’re mystified as to how the State Department can acknowledge the negative effects of the Earth’s dirtiest oil on our climate, but at the same time claim that the proposed pipeline will ‘not likely result in significant adverse environmental effects,’ ” said the Sierra Club’s Michael Brune.
Environmentalists in Congress were up in arms as well. “The draft impact statement appears to be seriously flawed,” said Representative Henry Waxman, ranking member of the House Committee on Energy & Commerce. “We don’t need this dirty oil. To stop climate change and the destructive storms, droughts, floods, and wildfires that we are already experiencing, we should be investing in clean energy, not building a pipeline that will speed the exploitation of Canada’s highly polluting tar sands.”
And just as environmentalists bashed the State Department report, the industry and its backers in Congress cheered it. “No matter how many times KXL is reviewed, the result is the same: no significant environmental impact,” said Marty Durbin, executive vice president for the American Petroleum Institute.
“Today’s report again makes clear there is no reason for this critical pipeline to be blocked one more day,” said House Speaker John Boehner.
The battle is far from over—there is now a forty-five-day public comment period (activists wanted 120 days) and then a final review by Secretary of State John Kerry, followed by a determination of national interest from the White House. But by not flagging any major environmental problems, the State Department is removing a powerful argument from the conversation.
There is one final procedural beef that environmentalists and some reporters have voiced, and that I share: the late-Friday release of a heavily technical and very lengthy report, which Brune likened during a conference call to the actions of the Bush administration.
Literally twenty minutes after the report was posted, State Department officials held a conference call, and literally every reporter on the call had to resort to simply asking the officials what the report said. Each one protested that he or she hadn’t had time to digest the findings. This does not inspire much confidence in the federal process on Keystone going forward—something that could have used bolstering after the repeated conflict-of-interest scandals that have already emerged.
Sequestration Is Here: The Danger That Lies Ahead
John Boehner and Republicans are balking at Barack Obama's replacement plan, which still includes far more cuts than new revenues. (AP Photo/Pablo Martinez Monsivais.)
At midnight, $85 billion in federal budget funds will be sequestered (that is, held back) by the Treasury Department, with the potential to cause real pain for the economy and many Americans if Republicans and Democrats can’t agree to some sort of solution. (For an explainer about how this all came about, see here.)
The two sides are, naturally, quite far apart. The White House has offered a sequester replacement plan that it touts as “balanced” and thus ostensibly palatable to Republicans, though the administration is actually selling itself short: the plan should be quite appealing to the GOP exactly because it is unbalanced. The plan offers $930 billion in budget cuts with only $680 billion in revenue ($100 billion of which comes from Chained CPI, anathema to most progressives).
Republicans, meanwhile, want a sequester solution with no new revenue whatsoever—“The revenue issue is now closed,” House Speaker John Boehner said on Thursday—and many Republicans would like the sequester cuts rejiggered to spare defense spending and hit domestic and entitlement programs even harder.
So both sides are now playing the blame game, hoping that the public will get seriously angry about the disruptions caused by the sequester and blame the other side, thus bringing them to the table ready to give concessions.
There is substantial reason to be optimistic that Obama has the upper hand and will “win” this battle. The public appears to be on his side, and serious fractures within the GOP may soon emerge—defense hawks who cannot abide the Pentagon cuts much longer, and rationalists within the party who think the brand is being irreparably damaged.
But for progressives, is it really a win for Obama’s preferred approach to prevail? The emerging consensus is ‘no.’ Some of the cuts Obama offers are plain bad, like his offer to “reform” federal retirement programs and save $35 billion, which means in essence to take $35 billion from the pensions of public workers. Many cuts are inoffensive, and some are good cuts: like reducing certain agricultural subsidies and reducing Medicare payments to big drug companies.
The revenue would mainly be taken from the wealthy via capping deductions and closing loopholes that benefit top earners. But there’s that Chained CPI bit (or “superlative CPI,” as the White House refers to it) that really troubles progressives—and should. It represents a tangible cut to the safety net: seniors already living on $1,200 per month would see $1,000 less per year under the new formula. Disabled veterans would lose $1,400 per year, and middle-class taxes would be hiked on top of it. (The increased tax revenue is, I suppose, why the White House has classified Chained CPI as new revenue, but on the benefit side of Social Security and other programs, this is clearly a cut.)
Cutting entitlements for any reason is a no-go for many Democrats in Congress, especially when coupled with nearly a trillion dollars in budget cuts. That’s what would happen if Obama’s plan wins, and it’s what worries liberals. “There’s a broader concern about the fact that entitlements may get ensnared when we go to an alternative fix, [that] they won’t escape,” Representative Jerry Nadler told BuzzFeed.
The AFL-CIO issued a statement this week that didn’t back Obama’s “balanced” approach, but called for the sequester to be straight-up repealed. “There’s no need to replace the sequester in full or in part. We don’t need it. Republicans are saying we need to address the source of the problem as leverage to get entitlement cuts,” it read. The Congressional Progressive Caucus has also called for sequestration to be completely repealed.
That’s the best-case solution for progressives. (Realistically speaking, of course. The actual best-case solution is the comprehensive plan released by the Congressional Progressive Caucus.) But Boehner probably won’t be able to sell a full repeal of spending cuts in exchange for exactly nothing to his rambunctious hard-core caucus in the House. There might not be any deal to be had here.
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In that case, sequestration stays in place. That’s definitely worse than repealing it, but is it really worse than Obama’s grand bargain? Under sequestration half of the cuts come from defense spending; Medicare is protected except for a 2 percent cut to doctor reimbursements, and Social Security, Medicaid, the Children’s Health Insurance Program and food stamp programs are protected entirely.
The other domestic cuts are no doubt painful and bad policy, but progressives have a tough choice in weighing that against what Obama’s proposing. And this of course assumes Obama gets everything he wants, which will not happen. Whatever bargain Congress and Obama strike out, if they manage to get something done, will almost certainly be worse.
There are real dangers to enacting some kind of bargain with Republicans to end the sequester—clearly on policy, but also on the politics, even though the administration seems to think otherwise. If White House aides truly believe that achieving a “grand bargain” that includes chained CPI will yield some sort of political victory, they ought to pay closer attention to the blame game now happening around the sequester.
One of Bob Woodward’s central claims, and the one that spurred the now-infamous pushback from the White House, is that Obama’s team came up with the sequester. This has been relentlessly pushed by Republicans (who invented a corny #Obamaquester hashtag) and by far too many mainstream media journalists.
This is plainly ridiculous—Obama wanted a clean debt-ceiling hike in 2011, and Republicans denied it and forced a showdown. Republicans were not enticed by what the White House offered to end the standoff and demanded some kind of guarantee of budget reductions, and at that point an administration official proposed sequestration as a tool. To strip that final piece of the timeline of all preceding context, and say that somehow Obama wanted the sequester, is exactly backwards—but it’s what is happening.
This is identical to what would likely happen to Chained CPI. Sure, this whole showdown was created by Republicans. And everyone understands the GOP to be the party that wants to cut “entitlement” programs. But Republicans have very deftly avoided proposing specific cuts to Social Security or Medicare in this debate; only Obama has with his Chained CPI proposal. Does anybody really think that two years from now, Republicans wouldn’t pull the exact same parsing of history as they did with the sequester, and blame Obama for cutting Social Security, which an overwhelming amount of Americans oppose? (Remember too that this is exactly what the Romney-Ryan ticket did with the $700 million in Medicare cuts included in the Affordable Care Act.)
In short, the sequester is a disaster, but a potentially worse disaster may lie ahead. There are no good choices here, only less-bad ones, and progressives should be wary about confusing political victory with a policy victory.
In better news from Capitol Hill, Democrats think they may be able to push through a financial transactions tax this time, George Zornick writes.
Financial Transactions Tax Introduced Again—Can It Pass This Time?
Representative Peter DeFazio and Senators Tom Harkin and Sheldon Whitehouse (left to right) announce a bill to create a financial transactions tax on February 28, 2013, in the US Capitol. Photo by George Zornick.
Just like the Congress before this, and the one before that, the 113th Congress will have a financial transactions tax to consider—and its backers are confident that, this time, they can make it law.
Thursday morning in the US Capitol, Senators Tom Harkin and Sheldon Whitehouse, along with Representative Peter DeFazio, announced the latest version of a tax on Wall Street trading: it would place a small tax of three basis points (that is, three pennies for every hundred dollars) on most non-consumer trades. Senator Bernie Sanders is also a co-sponsor of the legislation, as are nineteen members of the House.
If enacted, the tax would generate $352 billion in revenue over the next ten years, according to the Joint Committee on Taxation. It would apply to traded stocks and bonds, derivative contracts, options, puts, forward contracts, swaps and other complex Wall Street instruments. It would not cover the initial issuance of any stocks or bonds, nor covers or loans in the form of stock.
Three pennies per one hundred dollars would not be noticeable to most retail operations and average Americans—someone with a 401(k) balance of $60,000 (the median in the United States) would pay $18 per year in financial transactions taxes under this bill, and it contains a tax credit to cover the cost of the tax for contributions to tax-benefitted pension, health and education plans.
This transactions tax would most notably impact high-frequency traders—and this is a feature, not a bug. High-speed trading presents a real threat to the economic system and would theoretically be slowed if the bill is passed. DeFazio said the measure would “bring more stability to the financial markets, favoring long-term value investors—those who want to build an economy.”
Why might this bill succeed, where others have failed? For one, the international landscape is changing—eleven Eurozone countries are planning to implement a financial transactions tax at the beginning of next year, and are urging the United States to join the effort. (The European version calls for ten basis points.)
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The sequestration and continuing resolution fights present another opportunity to wedge a Wall Street tax into the discussion. If Republicans eventually come off their intransigence against raising any new revenue, they will be looking for ways to do it while lowering rates, and the transaction tax presents a great opportunity to achieve that. “I have to ask, what other options are there for raising $350 billion with such a negligible impact on middle-class Americans and Main Street businesses?” said Harkin.
A staff turnover at the White House has also encouraged the bill’s sponsors. At Thursday‘s press event they shared some of their experiences with past administration officials, including some details that were not public until now.
DeFazio noted that in 2009 Obama was “very interested” in a financial transactions tax, but said “unfortunately it was assigned to Larry Summers and Timmy Geithner, who were both absolutely opposed to it, and they deep-sixed it and never brought anything back to him.” (This was reported in Ron Suskind’s book Confidence Men.) “Well, they’re both gone, thankfully,” said DeFazio.
Harkin, too, pointed a finger at the now-departed Geithner and recalled a caucus meeting last September. “I brought it up to him, that it looked like the Europeans were moving ahead with this [tax]. And you know what he told me?,” said Harkin. “He said ‘I hope not.’ That was Mr. Geithner.”
The new Treasury secretary, Jack Lew, said in written answers to the Senate this month that the administration still opposes such a tax—but Harkin said that in private discussions, Lew was much more open. “I can’t put words in his mouth but he didn’t say no—he wasn’t saying no like Mr. Geithner was,” said Harkin. “He was saying that he was basically open to looking at it and engaging on further discussions on it. That’s just the difference in two secretaries of the Treasury.”
The odds are still long for a financial transactions tax in the United States, given Wall Street’s enormous power in Washington, but there’s little doubt that at least the landscape is shifting in a favorable way. And if Congress does enact it, it won’t be the first time—there was a financial transaction tax on all stock transactions until 1966. Congress actually doubled it in the 1930s.
“Congress had the guts back then to double the tax at the height of the Great Depression, and use that money to rebuild the real economy, to put people back to work. That’s the same situation we’re in today,” said DeFazio. “While we’re doing that, and making those investments, we have to figure out how to deal with our growing burden of debt. So I believe that this tax is a tax who’s time has come for many, many reasons.”
A major corporation helped pay for Obama's Inaugural Ball—and bought itself a nice favor down the road, George Zornick writes.
Did a Contribution to Obama’s Inaugural Win a Crucial Nuclear Loan Guarantee?
Michelle and Barack Obama greet attendees at the Inaugural Ball. Southern Company helped fund the event and is now up for a loan from the administration. (AP Photo/Carolyn Kaster.)
President Obama’s inaugural committee struggled to raise money for the festivities earlier this year—perhaps that’s normal for the second time around, especially when the first inaugural was so hyped and so historic. The sluggish fundraising came even though the committee allowed corporate contributions, unlike the first inauguraiton, and also made a major retreat on donor transparency: the inaugural committee released only the donor name, and not his or her employer, city, state and amount donated. (The Center for Responsive politics has still only matched 60 percent of the names released by the committee to an employer, and it has no idea how much the person donated.)
But as the inaugural approached, two major corporations stepped up to the plate. The week of the ceremony, the inaugural committee disclosed donations from Southern Company, one of the country’s largest utilities, and United Therapeutics, a $1.5 billion pharmaceutical company.
The committee didn’t disclose how much money was given, but a Southern Company spokesman told the Sunlight Foundation shortly thereafter that the donation was for $100,000. The utility normally backs Republican candidates—it gave 73 percent of its 2012 money to the GOP—but was now apparently trying to make amends with the winner.
That makes sense, because Southern Company has substantial business before the administration. As the operator of some of the country’s dirtiest coal plants, it has serious interest in any new EPA regulations on greenhouse gas emissions. And it has doggedly been trying to win federal approval for an $8.3 billion loan guarantee for two new nuclear plants in Georgia.
Lo and behold, earlier this week—just one month after the inauguration—this happened:
Southern Co. expects to reach a final agreement with the Obama administration on a loan guarantee for its new nuclear-power plant by the middle of the year, a senior company executive said Thursday in the latest positive sign for the proposed $8.33 billion deal.
Joseph “Buzz” Miller, Southern’s executive vice president for new nuclear development, said “there has been movement” in negotiations with the Department of Energy, and the company is “newly optimistic that sometime middle-year, that we can close on the loan guarantee.”
The development was first flagged by Tyson Slocum at Public Citizen, who has been tracking the Southern Company donation. He raises the obvious and very pertinent question here: is this sudden “movement” and “newly optimistic” attitude a direct result of a major contribution to Obama’s struggling inaugural committee? It’s certainly a reasonable conclusion to draw, and it requires some degree of naiveté about Washington to believe these are just entirely unrelated coincidences. At the very least, this creates a terrible perception problem.
This gets to the heart of Obama’s embrace of outside corporate money to get himself elected (remember his campaign’s official endorsement of outside money groups) and the subsequent embrace of corporate money to get himself inaugurated in due splendor. The Obama team made the case that it was a necessity to keep up with the avalanche of outside money that would be marshaled by Republicans—that it would be outrageous to unilaterally disarm. This strategic argument was accepted by many progressives, and it’s not without some merit. But the question always was—what is part two?
These companies that give Obama money aren’t doing it because they think he’s just a great guy. They want access and influence, and in order to keep the money flowing, the administration must offer some degree of it, or the money will quickly dry up.
Note, as well, that United Technologies, which gave a late inaugural donation along with Southern for an as-yet unknown amount, is currently seeking FDA approval for an oral drug to treat pulmonary arterial hypertension. It already makes the injectable version, but the FDA rejected its application for the oral drug in October because the agency wasn’t convinced the drug was actually effective.
Naturally the FDA should only base its decisions on the public good, not outside political calculations. People should have no fear that this is occurring, but these inaugural donations no doubt create that perception, and undermine public faith in how the administration is operating.
Similarly, nuclear loan guarantees are risky business—a CBO report in 2011 raised serious questions about undue risk to taxpayers, and a White House–mandated report released just this month called for greater oversight of the program, though it also scaled back the earlier risk assessment. Southern shouldn’t have a bigger voice in this conversation just because they have the money. (Slocum is calling for all negotiations to be halted until a full record of communications between Southern and the administration is released, so the public can be certain there has been no undue influence.)
This issue is all the more pertinent because even though the election is over, the Obama administration continues to court big corporate dollars by converting Obama for America into Organizing for Action, a 501(c)(4) group that can accept unlimited, undisclosed corporate contributions. (Officials say the new OFA will voluntarily disclose donors every quarter, and give a range of the donation, but not an exact amount.)
Just yesterday, White House press secretary Jay Carney was grilled by reporters over a New York Times report that OFA informed donors that $500,000 would win a personal meeting with Obama. Carney struggled to explicitly deny that assertion. Again: these donors aren’t paying a half-million dollars just to get their photo taken or see the Oval Office. They almost certainly want something, and for the system to work, there must be some kind of understanding that they might get it.
Another Ad Attacks McConnell on Gun Control
Ahead of a big Senate hearing this week on an assault weapons ban, Minority Leader Mitch McConnell will again be the target of tough new ads in his home state on gun control—reminding voters of the money he’s taking from the industry and his hardline stance against any new reforms.
The new ad, taken out by the Progressive Change Campaign Committee, features a Kentucky hunter named Gary who calmly boasts that he only needs one shot to take down a deer, and doesn’t understand why anyone would need high-capacity weapons. He then blames McConnell for blocking reform so he can keep receiving gun industry money. See it here:
As we noted earlier this month, McConnell appears vulnerable on this issue, even in Kentucky, where he faces re-election in 2014. Public Policy Polling found that 82 percent of Kentuckians favor universal background checks (the subject of PCCC’s last ad), and 50 percent favor an assault weapon ban, with 42 percent opposed.
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This ad will air on broadcast and cable in Lexington, Louisville, Bowling Green and rural Paducah markets, as well as online across the state. (It will also air in Washington, DC). After this run PCCC will have run $100,000 in gun control ads against McConnell, mainly from small donors.
Gun control is emerging as one of the early themes in McConnell’s re-election, which is still over twenty months out. In January he vowed to block all Obama gun laws in a telephone recording his campaign used to contact voters across the state.
Hell has frozen over! Well, not quite, but Rupert Murdoch has made an excellent argument against the Keystone pipeline, George Zornick writes.
Rupert Murdoch Actually Raises a Good Point About Keystone XL
The irascible head of News Corp sent the above Tweet on Thursday, undercutting months of diligent work on behalf of his American cable news network to paint the Keystone XL pipeline as the safest, most awesome public works project ever.
Aside from providing pipeline opponents endless “even Rupert Murdoch thinks …” talking points, Murdoch has done a real service here by highlighting a sometimes underlooked problem with Keystone XL: pipeline integrity. Indeed, tar sands oil is uniquely heavy and dirty, and the government isn’t totally sure it can be safely transported. Which is not what one really wants in a pipeline that literally traverses the entire country.
When the State Department issued its first environmental review, it said “there could be from 1.18 to 1.83 spills greater than 2,100 gallons per year” for the entire project and helpfully added that “crude oil spills are not likely to have toxic effects on the general public.”
Yet, the existing portions of the Keystone pipeline saw fourteen spills in the first year of operation, and there have been more since then. Dr. John Stansbury of the University of Nebraska conducted the first independent analysis of the Keystone XL pipeline and found a likelihood at the high end of the State Department estimate—1.8 spills per year, or ninety-one over the next fifty years—but strongly contested the contention that it wouldn’t be harmful to the public.
If a spill happened where the pipeline crosses the Platte River, Stansbury noted, benzene—a human carcinogen—would travel unabated down the Missouri River for several hundred miles and affect the drinking water for hundreds of thousands of people in cities like Lincoln, Omaha and Nebraska City in Nebraska and St. Joseph and Kansas City in Missouri.
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The risks along the Keystone XL pipeline are greater because tar sands oil is much heavier than regular crude—and the government doesn’t have a handle on how to regulate its transport. Last year, Cynthia Quarterman, the administrator for the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, told Congress that her agency had not evaluated the risks of transporting tar sands oil and did not know if the safety regulations currently in place were adequate to address transportation of heavy tar sands crude.
This is a crucial point, and Murdoch has done a real public service here (we’ll let that bit about fracking being cleaner slide for the moment). And it’s a very useful point for pipeline opponents to make—because while the governor of a state traversed by the pipeline may not care much about long-term global warming, he or she surely does care about massive, dangerous oil spills in the near-term. It was the initial opposition of the Nebraska governor that helped lead the administration to delay the project, and more governors should closely examine what the Keystone XL pipeline could do to their state if there is a spill.
There are plenty of other reasons to oppose the project too—chiefly, the incredibly dangerous carbon emissions it would unleash, or the paltry amount of jobs it would create (only twenty once the pipeline is running, and as little as 2,650 during construction), or the fact that gas prices in the Midwest would spike. But thanks, Rupert, for reminding people of another one.
Last weekend, marchers in Washington, DC, called on Barack Obama to turn down the pipeline, George Zornick reports.
'Forward on Climate' Rally Sends a Message to Obama: No Keystone
A sign at the "Forward on Climate" rally in Washington, DC, on February 17, 2013. (Photo by George Zornick.)
Over 35,000 people descended on the National Mall in Washington on Sunday, huddled together against a stinging cold wind to deliver a message of opposition to the Keystone XL pipeline. Their audience was really just one man, the only one with the power to stop the project: Barack Obama.
“This movement has been building for a long time. And one of the things that’s built it is everybody’s desire to give the president the support he needs to block this Keystone pipeline,” Bill McKibben, president of 350.org, told reporters just before the rally began. “The time for him to stand up now. He’s been saying good things about climate change, but the easiest, simplest, purest action he could take is to not build this long fuse to one of the biggest carbon bombs on earth.”
That message of constructive support is evident in the rally’s title, the “Forward on Climate” march, which co-opted the president’s campaign 2012 campaign slogan. The famous Obama “O” from campaign signage is also part of the rally’s graphic messaging, and numerous placards with inspirational quotes from Obama about climate change could be seen in the crowd. Several speakers, including US Senator Sheldon Whitehouse, addressed the crowd before a March to the White House.
So this isn’t your standard protest, but rather a rally of support. But organizers aren’t naïve about political realities—and there was some tough talk for the president, too.
Van Jones, who worked in Obama’s White House in 2009 as his “green jobs czar,” made it clear in a pre-rally interview that the burgeoning anti-pipeline movement would not be bought off with other initiatives, like tougher EPA rules or more great speeches.
“I think we should take the president at his word, but make him honor his word,” Jones said. “This pipeline, if it goes through—the first thing that the pipeline runs over is the credibility of the president of the United States. That’s the first thing it runs over. He said that he’s not going to let us be a generation that cooks the earth.”
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Jones continued: “If we lose, we lose everything. We’re fighting for the children of all species. This isn’t just a fight about Democrats versus Republicans in the United States. The children of all species forever are going to be impacted by what we do in this town for the next twelve to twenty-four months.
“So when you have that kind of fight, and people know that’s the fight that it is, you’re not going to see the sort of compromising you saw in the past. This is a different environmental movement. This is a different moment.”
And if Obama does approve the pipeline? Jones said it would define Obama in history’s eyes. “Every other gain this president has done will be erased over the next ten, twenty, thirty years by floods, by fires, by droughts, by superstorms. His legacy is on the line.”
You can watch a livestream of the rally here, and stay tuned to TheNation.com all day for updates.
UPDATE: Here is three hours of the rally, including speeches and the march to the White House:
As controversy rages over the Keystone pipeline, senators Bernie Sanders and Barbara Boxer have introdued a 'gold standard' climate change bill, George Zornick writes.
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