Lee Fang | The Nation
Austerity, Deregulation and the Texas Fertilizer Plant Explosion
Firefighters conduct search and rescue of an apartment destroyed by an explosion at a fertilizer plant in West, Texas, Thursday, April 18, 2013. (AP Photo/LM Otero.)
Last evening, a fertilizer plant owned by Adair Grain Inc. in West, Texas caught fire, then exploded, killing several people and wounding at least one hundred. The blast, caught on video from afar, destroyed nearby homes, businesses and a nursing home for seniors. There are still lingering questions about how this happened, but documents suggest the plant faced little regulatory scrutiny.
The Dallas Morning News reported that the plant filed papers with state and federal environmental regulators in 2006 claiming that there were “no” fire or explosive risks at the plant. "The worst possible scenario, the report said, would be a ten-minute release of ammonia gas that would kill or injure no one," noted reporter Randy Lee Loftis. Residents complained about the smell of ammonia as they "went to bed" that year, according to a filing.
As I pointed out on Twitter last night, in the last five years, the Occupational Safety and Health Administration (OSHA) has only inspected five fertilizer plants in the entire state of Texas—and the plant in West, Texas was not one of them. OSHA is severely understaffed and operates with a tiny federal budget. With the agency's current resources, that means "OSHA can inspect a workplace on average once every 129 years and state OSHA inspectors could inspect one every 67 years."
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There are specialized inspectors for chemical plants that, in theory, should have covered where OSHA or environmental regulators left off. The US Chemical Safety Board, which came into operation in 1998, is the commission tasked with investigating safety violations. Like similar boards, the Chemical Safety Board has virtually no resources: only a $10 million budget to cover every violation in the country. The Center for Public Integrity has a new, incredibly damning report, showing that the agency has failed to investigate several recent disasters, including the death of a worker at refinery in Memphis last December.
Budget cuts, and the sequestration, loom large as every federal workforce is scaled back. Rather than provoking reform, at least in the short term, tragedies like this may get worse as there are fewer and fewer regulators to ensure safety at these types of facilities.
The Republicans enjoy a comfortable majority in the house even though Democrats won at least 1.1 million more votes. Lee Fang explains why—and why it's likely to continue.
Like Modern GOP, Gilded Age Oligarchs Gerrymandered to Thwart Democracy
John Boehner speaks next to Mitch McConnell and other Republican members of Congress. (AP Photo/Susan Walsh).
Next year, even if voters cast millions more votes for Democratic candidates, it's likely John Boehner will continue as Speaker of the House, and Republicans will still have a firm grip to determine policy in the waning years of the Obama presidency. In the last campaign for the House, Republicans maintained a comfortable hold on the lower chamber of Congress even though Democrats won at least 1.1 million more votes. That's because over the last few years, GOP state legislators—with help from corporate backers—radically redrew congressional district lines to disadvantage Democrats in over half a dozen states, making representative democracy impossible until the next census in 2020, essentially. (For more on this, see Sam Wang's "The Great Gerrymander of 2012.")
The dismantling of the 'People's House' into a fiefdom for big business-friendly Republicans isn't necessarily a new development. In the late 19th and early 20th century, oligarchs manipulated the voting districts to repress the will, and the votes, of the people -- much like the gerrymandering we see today. A century ago, it was the U.S. Senate, not the House, that fell victim to such sordid tricks.
The last time America experienced a vast decline in representative democracy was the Gilded Era, a period where both major parties became consumed by a small number of robber barons -- tycoons who monopolized entire industries, bought politicians like cattle, killed striking workers, and manipulated cabinet secretaries and judges alike through a system of graft and petty bribery. In the South, the end of Reconstruction brought a reign of terror against recently enfranchised black citizens, who lost the right to vote -- and in some cases, faced re-enslavement -- as railroad and timber industry-financed Redeemer Democrat politicians rewrote state constitutions and began Jim Crow voting restrictions.
Another, less well known aspect of this wave of undemocratic action was in the North concerning town-based state legislative districts. Before the 17th Amendment, state legislators elected U.S. Senators. And in northern states like Rhode Island, Connecticut and New Jersey, state legislative districts were drawn based on counties or towns, not people. As hundreds of thousands of European immigrants arrived in these states, Republicans party chiefs, in a bid to suppress the votes of these new Americans, ruthlessly fought to ensure that legislative districts stayed the same, regardless of population. The immigrants could vote, but their votes wouldn't matter much.
In this era, towns of 565 Republican 'native' voters had the same representation of immigrant towns of 53,230. Despite numerous elections where a majority of voters attempted to send populist Democrats to state legislative office, who in turn would have selected populist U.S. Senators, a rigged system allowed a tiny population of largely wealthy, Protestant Republicans to dominate. This wasn't the exact same as gerrymandering per se, but it had a similar design and effect.
Author Jack Beatty, in his brilliantly researched book, Age of Betrayal: The Triumph of Money in America, 1865-1900, documents this type of voter suppression by way of unfair legislative districts:
Under a Colonial-era system of town-based as opposed to population based voting districts, 14 percent of Connecticut voters could elect a majority of the House of Representatives. Between 1818, when the Connecticut state constitution adopted the town-based standard, and 1910, Hartford's population grew from 6,000 to 98,000, Waterbury's from 2,000 to 73,000, New Haven's from 8,000 to 132,000 -- without additional representation. In 1890 New Haven, population 86,000, sent the same number of representatives to the state legislature as Union, population 431. New Haven's voters were immigrants and Democrats; Union's "native" and Republican. [...] The national Republican Party depended on its Connecticut "rotten borough." Between the 1870s and the 1890s it sent six Republicans senators to Washington, where they cast key votes on the tariff and the currency and enabled the GOP to control four different Congresses. Republican-appointed judges on the state Supreme Court rejected attempts to change the formula of Connecticut's anti-democracy, which in weakened strength lasted until ended by one-man, one-vote court rulings of the early 1960s.
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In Rhode Island, the GOP party boss who enforced a similar "anti-democracy" of warped state legislative districts was also the chief counsel for the New Haven Railroad and held stock in the Providence Electric Company, both of which pumped money into the party's vote-buying and immigrant vote-suppressing machinery. Senator Nelson Aldrich, the infamously corrupt Rhode Island senator and powerful chair of the Senate Finance Committee during much of the Gilded Era, was elected through this political system and elevated himself from wealthy New England merchant to robber baron status through lucrative investments in companies he bestowed with generous subsidies and tax loopholes.
During this era, there were other ploys to maintain control of the U.S. Senate. As Beatty notes, the GOP maintained control of Congress by admitting a large number of Republican-leaning territories that did not meet the historical criteria for statehood (West Virginia, Kansas, and Nevada during the war; followed by Nebraska, Colorado, North Dakota, South Dakota, Montana and Washington) in a bid to add additional GOP senators. "Excluding West Virginia, of the eleven states admitted between 1861 and 1869 only six equaled 'the size of an average congressional district (including Colorado), two were roughly half that size, and Nevada was one-sixth the normal size,'" writes Beatty, quoting from a study by Charles Stewart and Barry R. Weingast.
In the modern age, gerrymandering has made a mockery out of representative democracy, creating congressional districts that twist and turn to ensure partisan domination. Pennsylvania, a state that voted for Obama by 5 percentage points in the last election, elected only 5 Democrats out of 18 congressional districts because of the district lines drawn by Governor Tom Corbett and his allies in the legislature. Ohio, Virginia, Michigan, and Florida are other examples of dramatically undemocratic lines crafted to allow Republicans to capture more seats than they ordinarily could. According to ThinkProgress, Democrats would have to win 7 percent of the popular vote in order to win a slim majority in the House of Representatives under the current gerrymandered system.
And who can we thank for casting a shadow over the legitimacy of our Congress? Devon Energy, Altria Group, Wynn Resorts, ETC Capital, Wal-Mart Stories, Citigroup, Koch Industries, AT&T, Comcast, ExxonMobil, Eli Lilly, and other large firms that helped finance the Republican State Leadership Committee, the GOP committee that masterminded the current gerrymander.
Meanwhile, Republican Senator Mitch McConnell's former plan to smear Ashley Judd's mental health and religion has been exposed, prompting the senator to make a bizarre Watergate analogy.
Here's a Real Watergate-Style Political Scandal
Senator Mitch McConnell with senators Mike Johanns, left, and John Cornyn, right. (AP Photo/Charles Dharapak.)
This morning, Mother Jones dropped a bombshell of a story revealing Senator Mitch McConnell and his top aides discussing how they planned to use Ashley Judd's mental health and religion to smear her in a political campaign. (Judd, a potential Democratic challenger to McConnell, recently announced she would not run). The Republican Party has reacted with anger, claiming that the story, based on a recording given to reporter David Corn by an anonymous source, is based on "Watergate-style tactics," insinuating that some type of break and entry occurred at McConnell's office.
The claim appears to be a distraction at this point since there is no evidence that the recording was illicitly obtained. Mother Jones says its lawyers vetted the tape, as the Washington Post's Greg Sargent notes.
While I'm certain much of the political press will leap at McConnell's unsubstantiated claims of Watergate tactics, there's another scandal of political espionage and snooping that has not received much attention. And in an ironic twist, it relates to McConnell since the organization at the center of it is one of the senator's closest allies in Washington.
First, let's establish what constitutes "Watergate-style tactics." In June of 1972, a group of former CIA officers, working on a plan concocted by Richard Nixon and his closest aides and financed by a secret campaign fund, broke into the offices of the Democratic National Committee—housed temporarily in the Watergate building by the Potomac—to install secret recording devices (bugs) and to steal information from Democratic leadership. The plan was part of Nixon's reelection effort that year. During one of the attempts, a piece of tape left on a door in the DNC office tipped off a security guard to the trespassing Nixon operatives. The political press largely ignored the burglary until two intrepid Washington Post reporters dug deeper into the scandal, which of course led to Nixon's impeachment hearings.
In the modern age, the same goals of the Watergate break-in can be achieved without physically breaking or entering any actual buildings. Modern hacking technology allows a criminal to send a PDF or another file to their target, and as soon as the file is opened, every e-mail, every keystroke, every document and database on that victim's computer can be accessed remotely by the criminal. Such technology has been used by the American government to go after al Qaeda and other terrorist threats. But recent evidence shows that the Chinese government and even American interests appear willing to use this form of hacking against political targets here in the United States.
In the Fall of 2010, attorneys for the US Chamber of Commerce, the largest big business lobbying organization in the country (and not be confused with local chambers of commerce), began working on a secret plan to discredit and destroy their political opposition. The Chamber had just spent a record amount on the midterm elections to elect a new, much more Republican Congress—using corporate money, thanks to Citizens United. The Chamber had also faced a series of scandals, from a story in the New York Times revealing that it had laundered charitable money from AIG for political purposes to a story I wrote for ThinkProgress revealing that it had solicited foreign money for the same legal 501(c)(6) entity used to run partisan campaign ads.
The Chamber's attorneys began working with a crew of military contractors—including HBGary Federal, Berico, and Palantir—to devise a plan that could be used against the AFL-CIO, SEIU, the Center for American Progress, US Chamber Watch and other liberal critics. Some of the proposals were simply unethical: efforts to plant false documents, impersonate liberals, etc. HBGary Federal inadvertently revealed the entire plot by threatening a splinter group of Anonymous, the hactivist collective, which then proceded to steal all of HBGary Federal's e-mail and release them onto the web. Scott Keyes and I first broke the story, using the e-mails. However, out of the 70,000+ e-mails, the initial press coverage about the HBGary Federal scandal related to simply the unethical sabotage plans in one or two of the proposals.
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About a week after the initial story broke, we came upon another series of presentations buried within the e-mails, which included illegal hacking tactics well beyond what we had initially reported. The presentation notes that one of the consultants involved in the effort had expertise in “Information Operations” and could use “computer network attack,” “custom malware development” and “persistent software implants.” Boasting that they could establish a “fusion cell” of the kind “developed and utilized by Joint Special Operations Command (JSOC),” the contractors' presentation claims they could use “zero day” attacks to exploit vulnerabilities in Flash, Java, Windows 2000 and other programs to steal data from a target’s computer.
This hacking technology—which allows one to seize control of a target computer without the victim's knowledge—mirrors the type of cyber tactics used by the government against terrorist threats. Notably, HBGary and Palantir, two of the firms involved in the plan, have extensive contracts with the US military. In fact, as I reported for The Nation in March of this year, the Chinese military hackers exposed recently by The New York Times and the firm Mandiant solicited a website set up by HBGary to develop some of their hacking technology used against American firms and other interests.
There were no discussions in the leaked e-mails about the legality of using such tactics. Rather, the Chamber’s attorneys and the three contractors quibbled for weeks about how much to charge the Chamber for these hacking services. At one point, they demanded $2 million a month. HBGary Federal and their partners were scheduled to meet the Chamber to finalize the deal on February 14, 2011, just days after Anonymous stole their e-mails and revealed the plans. As I've noted before, the Chamber, despite e-mails showing they had met with their law firm to discuss the project, denied any knowledge of the proposal and said it had never compensated the firms or entered into any agreement for the work described in the proposals.
The Chamber and McConnell have a long history of working together. One of McConnell's most trusted advisors, Steven Law, became the top attorney to the Chamber through mid-2010. There's no evidence McConnell had any knowledge of the Chamber plot.
However, the proposals in the leaked e-mails make clear that Watergate-style break and entry against political targets is easier than ever, and requires no messy burglaries or "bugs." If law enforcement is worried about political espionage, they should start with one the plot that has an obvious paper trail.
In his last post, Lee Fang takes on the political donations that corporations get away with not reporting.
Why Mandate Disclosure? Because Corporations Lie on Voluntary Political Transparency
Chamber of Commerce President Thomas Donohue at a press conference. Major health insurers have given the chamber millions of dollars to campaign against healthcare reform but reported almost none of the transactions. (AP Photo/Jacquelyn Martin.)
The Securities and Exchange Commission took a bold step in considering new rules that would require publicly traded companies to disclose political donations. This is a good idea, because since the Citizens United decision, corporate entities have moved away from disclosed campaign committees, and instead have begun funneling cash into secret campaign funds, mostly 501c nonprofits.
Last year, The Nation published an investigation that debunked the idea that corporate money has flowed mostly to so-called SuperPACs in the wake of Citizens United. Rather, big business has embraced nonprofit trade associations and issue advocacy groups to pour hundreds of millions into direct campaign advocacy. The distinction is important because SuperPACs, for all their problems, at least disclose their donors and spending records; trade associations and issue advocacy groups do not.
To the credit of reformers, particularly the Center for Political Accountability and several investor groups, many large corporations have voluntarily adopted transparency measures. While we should applaud corporations that go beyond the letter of the law in disclosing these funds, a system based on voluntary participation does not come close to solving the problem of secret political slush funds. In some cases, voluntary disclosure actually obscures the truth.
Take health insurance companies. Aetna, Aflac and WellPoint are among several that have adopted voluntary disclose rules to provide the public and shareholders with a window into their giving patterns. There’s one problem: they aren’t truthful.
In 2009, the major health insurers, including the aforementioned companies, secretly funneled over $86.2 million to the US Chamber of Commerce, a trade association, using another trade association as a proxy to move the money, to run television and radio advertisements against health reform. Aetna’s disclosures that year only revealed $100,000 to the Chamber. WellPoint and Aflac failed to report those donations, as well. The following year, during the midterm elections, Aetna again secretly provided $7 million to “American Action Network,” a social welfare nonprofit used to run partisan attack ads against Democrats, along with the Chamber, which spent over $50 million on a partisan campaign to elect mostly Republicans that year. Again, Aetna’s voluntary disclosure report made no mention of the money, which became public through an inadvertent regulatory filing.
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Similarly, several major oil companies have adopted voluntary disclosure guidelines that are fairly useless. ExxonMobil and Valero Energy are two examples: Both firms proudly produce annual reports on which candidates and political parties they fund. The problem? That data can be found already on the Federal Elections Commission website and related state-level disclosure websites, so there’s nothing new. As The Nation has reported, oil companies often work through secretive trade associations like the American Petroleum Institute, which has become more active in financing campaign-related advertisements and grants to other dark-money groups.
As Senator John McCain and others have noted, the hundreds of millions slushing in secret money is bound to lead to another major scandal. And that scandal will likely to produce a lot of liability for the corporations involved. Moreover, as attorney Jerry Goldfeder noted in a letter to The New York Times this week, the IRS has sent a questionnaire to 1,300 nonprofit groups questioning their tax exempt status. The increased scrutiny could lead to new questions that could increase liability for corporations: Are these groups being used to violate the Foreign Corrupt Practices Act, by funneling cash to foreign governments? Are consumer brands secretly funding ads that could harm the perception of their product (as was the case with Target and their donations to an anti-gay politician in Minnesota)?
Under the current system, only corporate executives, their lobbyists, and certain politicians really understand where the money is flowing. Shareholders, the public, and reporters have a right to know, too.
Read Lee Fang on Microsoft, which even as it runs an ad featuring same-sex marriage has supported the anti-gay CPAC.
Microsoft Helps Sponsor CPAC's Anti-Gay Conference
A book lampooning Barack Obama at the CPAC conference last year. (Reuters/Jonathan Ernst.)
In recent years, Microsoft has become one of the most gay-friendly corporations in America. Yet, as the company unveils a new advertisement featuring a same-sex wedding and signs onto a brief supporting marriage equality, Microsoft provides support for CPAC, the agenda-setting Republican conference that has moved to eject gay Americans from the conservative movement.
As Americablog reported, for the second year in a row, CPAC refused to allow GOProud, a right-wing gay advocacy group, from participating in their conference this week. “We got kicked out last year because we are gay,” said GOProud’s Jimmy LaSalvia over Twitter, adding, “We won’t be at CPAC.”
Though the American Conservative Union, the sponsor of CPAC, does not reveal its donors, I have a list of the group’s benefactors in previous years. In addition to Shell Corporation, the Edison Electric Institute, Koch Industries, and Chevron, Microsoft provides a significant contribution to the American Conservative Union Foundation. It appears that this year is no different. The Huffington Post’s Zach Carter tweeted a photo of Microsoft’s booth at the convention yesterday. The American Conservative Union’s board also includes a Microsoft representative, Suhail Khan.
Microsoft lobbies on dozens of issues, from tech policy to trade and tax issues. It seems likely that Microsoft helps underwrite CPAC to maintain influence among conservative activists and Republican politicians—to sell products and promote economic policies beneficial to Microsoft’s bottom line.
CPAC has been criticized not only for discriminating against GOProud, but also for providing a forum to a number of virulently anti-gay activists. If Microsoft is truly interested in reforming policies affecting gay Americans, it appears counterproductive to provide financial support to CPAC.
And it’s not only Microsoft that may face charges of hypocrisy. Cleta Mitchell, a partner to Foley & Lardner, the “Best Law Firm for LGBT Lawyers,” sits on the board of the American Conservative Union, which governs how CPAC is set up and run.
Notably, the Competitive Enterprise Institute (a big business-friendly think tank also sponsored in part by Microsoft) joined with a small group of conservative pundits to sponsor an event with GOProud near CPAC’s official confab, in part to protest the exclusion of gay conservatives.
Charles Koch Reflects on Last Election, Promises to Do More to 'Persuade Politicians'
Charles Koch. (AP Photo/Topeka Capital-Journal, Mike Burley.)
Charles Koch, the chief executive of Koch Industries who is worth an estimated $34 billion to $44.6 billion, has a new letter to his employees. Koch and his brother spent more than ever in the last election, financing anti-Obama attack ads, phone banks voter contact efforts and more—but came up short. In his letter, sent to tens of thousands of employees through the Koch Industries’ “Discovery” newsletter, Koch warns that “November’s election results … are part of a trend that, if not reversed, will destroy the American dream.”
The letter hits familiar themes, claiming regulation and taxation will ruin the economy and posits Koch’s political intervention as our only savior. Koch also implies more big-money spending on campaigns and political groups, writing, “As a company, we are committed to doing what is right in every aspect of our business. That is why we will continue doing everything we can to persuade politicians to put what is good for the country first, before it is too late.”
In a quasi-letter to the editor section of Discovery, there’s an array of letters all competing to heap the most praise on the Koch brothers and their patriotism. It really should be viewed in its entirety, just as a specimen of the bubble that some of the ultra-rich live under, but here’s a representative sample:
Dear Mr. Koch, Thank you, thank you, thank you – to your brother David and you – for being such fine and patriotic Americans. The courageous and principled stands that you take to help us retain and restore our liberty are truly inspiring. You are doing so much good for so many.—Larry Saunders Registered commodities rep. Franklin, Tenn.
Dear Mr. Koch, I want to thank you and your family for all you have done during this past election. The results are tough to acknowledge; however, the efforts that you put forth make me very proud of the company I work for. —Gretchen Chartier Koch Industries, Inc. Scottsdale, Ariz.
There’s even a letter from Stanley S. Hubbard, CEO of a media company that owns several NBC and ABC stations, who wrote, “Charles and David, please know that you can count on me, my wife and our family to stand foursquare with your ongoing efforts to preserve our unique American way of life.”
Past the exhalations of the Dear Leader, there’s a weird tension evident throughout the letter. Koch spends much of his piece complaining about the “crippling policies we have experienced in recent years,” comparing Obama’s government to the path of the former Soviet Union and Venezuela. Yet, other parts of the same newsletter boast that Koch Industries has never been better, with thousands of job openings, new acquisitions of smaller companies and plant openings. The economy has been so good, Koch Industries’ headquarters has been going through a major expansion.
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The economy has been so crippled under Obama that the Koch brothers have both more than doubled their fortune. The Forbes list estimates Charles and David Koch were worth $14 billion each in 2009. The same list released this year now says they're each worth $34 billion. And as Charles notes in his letter, 85 percent of his employees and a majority of his company's assets are in the United States.
How can Obama’s policies be so horrible if the economy is doing so well for Koch? A critic could point to certain wasteful programs or an outdated regulatory scheme, but how Koch has prospered so much under policies he says are destroying the economy, he doesn't say. It’s a one-dimensional letter, so these questions aren’t explored.
There are aspects of Koch’s letter that liberals may find common cause with, particularly his spirited denunciation of crony corporations and overbearing regulations concerning occupational licensing. On Page 5, there’s even an infographic that features Koch’s “Clean Air & Sustainability award” and the company’s sponsorship of “Green School grants.”
This high minded rhetoric and claims of environmental stewardship are little more than public relations spin.
Since the late eighties, Koch has been the premiere financier of groups dedicated to suppressing environmental science. Citizens for a Sound Economy (now known as Americans for Prosperity) unsuccessfully attempted to mobilize populist anger at regulations aimed at curbing acid rain and smog pollution. The company lobbied aggressively to cut environmental regulations around the time it was caught causing more than 300 oil spills in six states. More recently, Koch money has flowed to over fifty conservative nonprofits and media figures that have worked to suppress and discredit the science underpinning global warming. The tactics aren’t pretty. Last year, one Koch-backed think tank ran a billboard comparing belief in global warming to support for Ted Kacynski, the Unabomber. Koch-backed groups have harassed climate scientists, financed a small army of climate denying politicians, and even sponsored a “moon bounce in the shape of a SWAT car for children,” which symbolized the boogeyman of Environmental Protection Agency “Carbon Cops.”
Why the obsession with global warming? The “freedom” Koch discusses seems to relate to the freedom to pollute. Koch’s business empire, according to an estimate by Brad Johnson, emits several hundred million tons of carbon dioxide a year. The political suppression of climate science, and any reasonable response to the climate crisis, clearly benefits Koch Industries’ bottom line—and such selfish lobbying at the expense of the common good is the very worst example of crony capitalism.
The company may soon gain an even larger audience. Earlier today, news reports revealed that Koch may purchase at least the newspaper division of the Tribune Co., which includes the Los Angeles Times.
Read Lee Fang on a little-known US Chamber of Commerce plan to hack liberal advocacy groups.
Lobbyists Targeting Liberal Groups Channeled Chinese Hackers' Strategy
Attorney General Eric Holder, center, accompanied by US Intellectual Property Enforcement Coordinator Victoria Espinel, left, and Acting Commerce Secretary Rebecca Blank, speaks about strategy to mitigate the theft of US trade secrets, Wednesday, February 20, 2013, in the Eisenhower Executive Office Building on the White House complex in Washington. (AP Photo/Jacquelyn Martin)
The revelation, made by The New York Times and a firm called Mandiant last month, that the Chinese military is engaging in a sophisticated campaign of Internet spying and cyber attacks targeting American corporations and government websites provoked widespread alarm. What hasn’t been noted is that the Chinese plot bears much in common with a conspiracy to spy on and sabotage liberal advocacy groups and unions—a plot developed on behalf of none other than the US Chamber of Commerce back in 2010.
Indeed, Mandiant identified the Chinese plot by combing through the database of hacking tools managed by the same individuals associated with the American firm that had been enlisted to help the Chamber execute its spying and hacking plan, before it was exposed by the hacktivist group Anonymous.
Attorneys for the Chamber were caught negotiating for a contract to launch a cyber campaign using practically identical methods to those attributed to the Chinese, which reportedly could be used to cripple vital infrastructure and plunder trade secrets from Fortune 100 companies. The Chamber was seeking to undermine its political opposition, including the Service Employee International Union (SEIU) and MoveOn.org, but apparently had to scotch the plan after it was revealed by Anonymous.
At the RSA Conference in San Francisco, the “nation’s largest gathering of cyber security professionals,” The Nation spoke to a number of experts who said the same invasive strategies employed by the Chinese military could be easily used in political campaigns and other political contexts by anyone willing to take the risk.
The story of both the Mandiant report and the American lobbyist hacking conspiracy begins in February of 2011, when the hacktivist group Anonymous stole some 70,000 e-mails from a Bethesda, Maryland-based firm called HBGary Federal and dumped them onto the Internet. HBGary Federal was an affiliate of HBGary, a firm that maintained a database and discussion forum of hacking software called Rootkit.com, which served as a “malware repository where researchers stud[ied] hacking techniques from all over the world.” It appears the Chinese hackers, known as the “Comment Crew,” had participated to gain the types of software used to compromise computers owned by dozens of American interests.
The Mandiant report details how the disclosure of Rootkit.com’s user database from Anonymous not only revealed the e-mail account associated with UglyGorilla, or Jack Wang, and SuperHard_M, or Mei Qiang, two of the alleged Chinese hackers, but the IP address that helped confirm the Shanghai Pudong location of the Chinese military office building, from which it launched attacks on US-based targets. As Nate Anderson of Ars Technica reported, the theft of HBGary Federal’s data offered the Mandiant researchers a “treasure trove of information.”
Rootkits, a term used to describe software that can gain access to computer systems without detection, can often be used for malicious purposes. Asked why he thought the Chinese military would participate in an American site like Rootkit.com, Richard Bejtlich, Mandiant’s Chief Security Officer, told The Nation that at least initially, “If you wanted to get up to speed on that technology, that’s where you went.”
Mandiant compared the information from the Rootkit.com user database with data from other cyber security breaches attributed to Chinese hacking attempts to come to the conclusions in their report.
According to The New York Times and Mandiant, the Shanghai-based Unit 61398 of the People’s Liberation Army employing the “Comment Crew” hackers relied largely upon spear-phishing (often an e-mail to trick the recipient into opening a document or attachment containing a malicious piece of software, like a rootkit) to gain access to firms like Coca-Cola, the National Electrical Manufacturers Association, EMC, and Telvent, a company that produces programs for remote access for oil and gas pipelines.
As policymakers and major American companies continue to react to the news about the Chinese hacking, similar threats could play a role in labor organizing and political campaigns.
The disclosure of HBGary Federal’s e-mails revealed one of the most brazen political espionage efforts in recent memory, which underscores this threat.
In October of 2010, HBGary Federal was solicited by Matthew Steckman of the firm Palantir on behalf of attorneys representing the US Chamber of Commerce “about offering a complete intelligence solution” and “social media exploitation.” The Chamber had dealt with critical news about an IRS complaint alleging that the insurance giant AIG had illegally laundered millions of dollars to the Chamber in September. Also around that time, I wrote a separate story for ThinkProgress revealing fundraising documents that showed the Chamber had solicited foreign corporate money for the same 501(c)(6) legal entity the Chamber used to run campaign commercials during the midterm elections. The leaked HBGary Federal e-mails show the Chamber was interested in responding aggressively to this pressure.
By November of that year, Palantir, HBGary Federal and another firm, Berico, had discussed the effort to push back against the Chamber’s critics several times with a number of the Chamber’s attorneys at the law/lobbying firm Hunton and Williams, and had prepared a series of presentations detailing their proposal to the Chamber. One of the attorneys involved in the discussions, Hunton and William's Richard Wyatt, had already been retained by the Chamber to sue the Yes Men, a comedic advocacy group, for impersonating the Chamber at a prank press conference.
The presentations, which were also leaked by Anonymous, contained ethically questionable tactics, like creating a “false document, perhaps highlighting periodical financial information,” to give to a progressive group opposing the Chamber, and then subsequently exposing the document as a fake to undermine the credibility of the Chamber’s opponents. In addition, the group proposed creating a “fake insider persona” to “generate communications” with Change to Win, a federation of labor unions that sponsored the watchdog site, US Chamber Watch.
Even more troubling, however, were plans by the three contractors to use malware and other forms of malicious software to hack into computers owned by the Chamber’s opponents and their families. Boasting that they could develop a “fusion cell” of the kind “developed and utilized by Joint Special Operations Command (JSOC),” the contractors discussed how they could use “custom malware development” and “zero day” exploits to gain control of a target’s computer network. These types of hacks can allow an attacker not only to snoop but to delete files, monitor keystrokes and manipulate websites, e-mail archives and any database connected to the target computer.
In January of 2011, Hunton and Williams, which had met with the Chamber to discuss the proposals, sent by courier a CD with target data to the contractors. The targets discussed in e-mails included labor unions SEIU, IBT, UFW, UFCW, AFL-CIO, Change to Win, as well as progressive organizations like the Center for American Progress, MoveOn.org, Courage Campaign, the Ruckus Society, Agit-Pop, Brave New Films and others.
Though HBGary markets itself as a firm that uses its expertise in cyber security to help both companies and the government defend against malicious attacks, the e-mail archives leaked by Anonymous make clear that executives at the firm were interested in selling this technology for offensive capabilities. In an e-mail with Greg Hoglund, the founder of both HBGary and Rootkit.com, and part owner of HB Gary Federal, Aaron Barr, HBGary Federal's chief executive, described a “spear phishing strategy” that could be used on “our adversaries.” In another e-mail chain, HBGary staff discussed using a fake “patriotic video of our soldiers overseas” to induce military officials to open malicious data extraction viruses; in another, they discuss the success of a dummy “evite” e-mail used to maliciously hack target computers.
The tactics described in the proposals are illegal. However, there were no discussions in the leaked e-mails about the legality of using such tactics. Rather, the Chamber’s attorneys and the three contractors quibbled for weeks about how much to charge the Chamber for these hacking services. At one point, they demanded $2 million a month.
HBGary Federal and their partners were scheduled to meet the Chamber to finalize the deal on February 14, 2011. However, on February 4, Barr boasted to the Financial Times that he was preparing to reveal the identities of Anonymous, which responded with the hack that spilled the contents of HBGary Federal’s e-mails and Rootkit.com’s user database. HBGary Federal had also entered into talks about working on behalf of Bank of America to discredit the website Wikileaks and its perceived allies in the media. The e-mail trail ends on February 6; the Chamber, despite e-mails showing it met with Hunton and Williams to discuss the project, denied any knowledge of the proposal and said it had never compensated the firms or entered into any agreement for the work described in the proposals.
HBGary Federal, which shared the same owners and office space as HBGary, shut down in the wake of the leaked e-mails. Last year, HBGary was acquired by a military contracting firm called ManTech International for $23.8 million, according to disclosures with the Securities and Exchange Commission. The spokesperson for HBGary declined to comment on this story.
Although Rootkit.com is no longer online, similar websites like MetaSploit and TrustedSec offer hackers and cyber security professionals an array of software that could be used by anyone seeking to break into an organization, take control of their network and seize data.
“There’s nothing so unique about how you break into an organization,” said Nick Levay, the director of technical operations information security at the Center for American Progress, who spoke to The Nation by telephone. Levay, an expert on computer security, said there’s “lots of overlap” between the documented Chinese military cyber hacking incidents described by The New York Times and the Mandiant report and the tactics proposed by the contractors working with the Chamber’s attorneys.
Mandiant’s Richard Bejtlich described the malware tools as a firearm that could be used by anyone. “You could buy a firearm, but what are you going to do with it? Is it for hunting or self-defense?” Researchers commonly use sites like MetaSploit to develop defense software against certain cyber attacks. Or, Bejtlich said, “Are you outfitting an army to conduct an insurgency where you’re going to harass a foreign military for ten years?”
Levay said that malware or phishing attempts may be difficult to detect if the perpetrator is only interested in gathering intelligence. However, “any disruption or sabotage, they’re going to get caught,” said Levay. Bejtlich made a similar case, arguing that if domestic political organizations or cyber criminals attempt to sabotage computers in the United States, “the Bureau’s going to find you.”
Large firms that have been victimized by malicious hacking, including Google and Intel, at least have the resources to detect and counter most forms of computer crimes. But what about a small company, or political advocacy group with little resources?
“Political campaigns, absolutely, they have to be vigilant that they will be attacked,” said Ajay Uggirala, the director of product and technical marketing at the cyber security firm Solera Networks. “It’s going to be a dynamic,” Uggirala explained, “I wouldn’t be surprised if people use the good tools we have for bad purposes on political candidates.”
Meet Jason Rapert, the Koch-Backed Evangelical Steering Arkansas's Radical Abortion-Restriction Effort
On Wednesday, the Arkansas legislature lurched forward with a radical measure to ban most abortions if a fetal heartbeat is detected within six weeks of a pregnancy, a requirement experts say will force the state to insert a probe into a woman’s vagina to detect.
The bill also penalizes doctors who perform abortions after the arbitrary cut-off date with a Class D felony, carrying up to six years in prison and a fine of up to $10,000. The chief sponsor of the measure is Republican State Senator Jason Rapert, a fiddle-playing financial planner with his own evangelical outreach center that hosts mission trips to Uganda, Ghana and the Philippines. He has been among the loudest anti-abortion politicians in the state, and has sponsored a number of other radical bills, including a very strange effort to organize a constitutional convention to give state legislatures power over the national debt limit.
Here he is at a Tea Party rally from 2011, not only complaining about Obama’s Ramadan event but also warning the president that his people have had enough of “minorities” running the country (emphasis added):
RAPERT: I hear you loud and clear, Barack Obama. You don’t represent the country that I grew up with. And your values is not going to save us. We’re going to take this country back for the Lord. We’re going to try to take this country back for conservatism. And we’re not going to allow minorities to run roughshod over what you people believe in!
Watch it (via video uploaded by Keep Arkansas Legal, an anti-immigrant group):
In another part of the same speech, Rapert proudly declares himself a birther and attacks the state Supreme Court for knocking down a ban on gay adoptions -- another example, apparently, of “minority interests running roughshod over you and me.”
While Rapert certainly enjoys wide support in many corners of the evangelical movement (here he is Rev. John Hagee), what interests me is how many white-shoe corporations stepped in to support his candidacy last year. A look at his final campaign finance report reveals direct corporate dollars and corporate political action committees sponsored by companies not necessarily known for associating with the war on reproductive rights:
Here are some examples: Southwestern Energy Company PAC gave $2,000; ARCH PAC, of Arch Coal, gave $1,000; Eli Lilly and Company gave $500; Lisa Allen, an executive with Cox Communications, gave $1,000; Nucor Corp PAC of AR gave $500; AT&T Arkansas PAC gave $2,000; Verizon gave $1,000; and American Electric Power PAC gave $500.
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In 2012, Arkansas was one of several states to become substantially more Republican, with both the state house and senate falling into GOP hands for the first time since Reconstruction. Rapert’s district, a traditionally Democratic stronghold near Conway, was one of the pivotal seats that decided the balance of power. Rapert made abortion a major issue in the campaign, attacking his opponent, State Representative Linda Tyler for not doing enough to curtail abortion rights while serving as chair to the Arkansas House Public Health Committee.
As the The Washington Post’s T.W. Farnam reported, the Koch brothers–financed Americans for Prosperity (AFP) group made Arkansas a target state last year, and pledged $1 million dollars to key races to both defeat moderate Republican during the primaries, and to wipe the state of its remaining Democrats. Jay Barth, a professor at Hendrix College, a school near Rapert’s district, noted that AFP’s Arkansas mailers “prime[d] racial sentiments by using an image of an African-American doctor.”
Rapert, a signatory to the Koch’s “No Climate Tax Pledge” and a regular participant in AFP’s political events, also received $2,000 directly from Koch Industries last year for his campaign.
Perhaps business interests were drawn to Rapert for his novel justifications for corporate-friendly legislation. According to the Blue Arkansas Blog, Rapert defended his support for bringing high-interest payday lending back to the state by comparing such loans to the microfinance loans used to support Third World farmers.
Libertarian billionaire Charles Koch, author of his own ideology he touts as the “Science of Liberty,” is famous for spreading his beliefs (and his business interests) through the aggressive use of political donations to candidates, think tanks, media outlets, universities, career-training institutes and dark-money attack-ad groups. But critics, including myself, point to the hundreds of state and federal Koch-backed politicians who seem to prioritize fairly authoritarian policies. Rapert’s transvaginal probes and government-forced pregnancies do not seem to cohere with any notion of individual liberty I’m familiar with.
Remember Jeb Bush? He’s back making money off of education reforms his nonprofit promotes.
E-Mails Show Jeb Bush Foundation Lobbied For Businesses, Including One Tied To Bush
Jeb Bush, right, speaks to reporters after an education rally in Little Rock, Ark., on Jan. 29, 2013. (AP Photo/Danny Johnston.)
A public interest group has released the results of a multi-state Freedom of Information Act request concerning the lobbying efforts by the Foundation for Excellence in Education (FEE), the nonprofit led by Jeb Bush. The e-mails confirm previous reporting showing that Bush’s policies are designed to benefit businesses seeking to privatize public education—particularly the companies that finance Bush's nonprofit.
What's new in this release, however, is the revelation that Bush could be using his education reform crusade for personal gain.
In one e-mail from last year, Bush's top aide at his foundation, Patricia Levesque, communicated with school officials to urge them to use a company called SendHub, a start-up that uses cloud computing and text messages. Bush, according to TechCrunch, has a modest "five-figure" investment in SendHub. Garrett Johnson, the founder of SendHub, previously worked for Bush and still serves on the board of Foundation for Florida's Future, another Bush-run education nonprofit.
In November of 2011, I published my first investigation with The Nation and The Nation Institute concerning the rush of for-profit education technology companies to enact radical “virtual schools” across the country. In the reporting, we uncovered that many individuals associated with the education reform universe—even those ostensibly leading major philanthropic foundations—are closely tied to the for-profit interests who stand to gain from these policies. Levesque, we reported, was quietly receiving funds directly from for-profit education tech companies while also serving as the executive director of Bush’s nonprofit.
The new round of FOIA e-mails should send shockwaves through the reform movement. In the Public Interest, the group that filed the request, summarized some of their other findings:
— In New Mexico, FEE acted as a broker to organize meetings between their corporate donors and individual Chiefs [for Change].
— Maine moved the FEE policy agenda through legislation and executive order that would remove barriers to online education and in some cases would require online classes—including eliminating class size caps and student-teacher ratios, allowing public dollars to flow to online schools and classes, eliminate ability of local school districts to limit access to virtual schools.
— In Florida, FEE helped write legislation that would increase the use of a proprietary test (FCAT) under contract to Pearson, an FEE donor.
The simmering scandal with Jeb Bush's nonprofit recalls a similar scandal with his brother, Neil Bush, who led Ignite! Learning, a company the Los Angeles Times found profiting from No Child Left Behind policies enacted by President George W. Bush.
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While the education tech industry has enjoyed a recent surge thanks to the policies enacted by Jeb Bush and his allies, there's growing evidence that these privatized, proprietary charter schools are under-performing. One of the biggest beneficiaries of the virtual charter school policies peddled by FEE, the publicly-traded online charter school management company K12 Inc., has been cited in several studies for its abysmal performance. A report last year found that K12 Inc.'s students score between 14 and 36 percent lower than their non-cyber school peers. Only 27.7 percent reported meeting Adequate Yearly Progress standards in the 2011 school year, which the National Education Policy Center notes compares poorly to the 52 percent average scored by brick-and-mortar schools.
There is perhaps no better week for these e-mails to emerge. This week is "School Choice Week," a public relations blitz designed by Jeb Bush and Frank Luntz to drum up support for school privatization and teacher union-busting laws. Rather than a movement to support children, the e-mails show that many of these reforms are also about padding the profits of companies like Charter Schools USA, K12 Inc., Pearsons and Jeb's SendHub.
Lee Fang last wrote about gun companies rallying customers to fight reform.
Obama's First Term Was Shaped by Clashes With Big-Business Interests
(AP Photo/Carolyn Kaster.)
President Barack Obama begins his second term this week with reporters across the country attempting to size up the lessons from his first.
In assessing his first four years, however, the media are failing to address how much big money has become a reactionary force in American politics. Obama isn’t just the first incumbent president forced to deal with a Citizens United election system; he’s also faced unprecedented intransigence from America’s largest corporations, a K Street culture in DC that seduces the brightest minds with bags of cash, and lobbyists more eager than ever to take policy battles to the grassroots.
The Hill, a Capitol Hill newspaper, says the young president is now aware of “how violently the political pendulum can swing.” The conventional wisdom is that Obama came into office with sky-high approval ratings and a popular mandate; spent that political capital on a bruising health reform fight; failed to uphold expectations from his base and lost the House of Representatives in the midterm campaign; then, rallied from the low point of the debt ceiling negotiations to a commanding re-election campaign last year.
I don’t disagree with the broad outlines of this narrative. The problem is that many of these accounts do not explain how special-interest lobbying shaped Obama’s hurdles.
The new PBS Frontline documentary on the first term, “Inside Obama’s Presidency,” is a perfect example of news missing part of the story. The piece accurately notes Republicans misled the administration about needing extended time to debate health reform, and that such delaying tactics were in fact part of a strategy to kill the measure.
There is no mention that several of the industry stakeholders, like chief health insurance lobbyist Karen Ignagni, who promised to work towards a proactive solution, were also misleading Obama. One expert in the documentary characterized the summer of 2009 thusly: “The clock is ticking, the calendar is moving … the weight of public opinion is turning against this health care plan.”
The weight of public opinion was being dragged by expensive lies.
The documentary carried no mention of the $323.75 million in negative advertising spent by opponents of health reform, or the hundreds of millions spent by lobbyists working to water down, prevent or roll back the law. There is no mention of the $450,000 starting salaries handed out to Democratic Senate staffers willing to defect and work for lobby firms. No mention of insurance industry money to secret money efforts against Democratic lawmakers. And PBS did not disclose that opposition groups, with tens of millions in funding, financed a small army of organizers to fan out into states to coordinate anti–health reform Tea Parties and town-hall events.
Obama’s open hand to the business community led to many daggers in the back. After Obama shielded bailed-out bankers from anger at their extravagant bonuses, they repaid him by fighting tooth and nail against the most measured of financial reforms. After Obama helped secure a stimulus package the US Chamber of Commerce strongly supported, the same Chamber ran commercials against lawmakers (all Democrats) who voted for the “failed stimulus.”
Washington, DC, is a city where an elected official can receive a 1,452 percent raise simply by joining the ranks of the influence industry. (In related news today, Ben Nelson, the Democratic senator from Nebraska who nearly killed health reform, has become an insurance industry official and an adviser to a lobbying firm.) The Obama administration pleaded with lawmakers to enact meaningful reforms, but an inside strategy can only go so far when the benefits of selling out are so dazzling.
So it is heartening that Obama has reportedly decided to embark on his second term with a realization that he must out-maneuver entrenched interests if he wants to change them. There are signs that the populist tone that won him another four years in office is here to last. And the best indication of a more experienced Obama is the news that he will be utilizing his volunteer army through his campaign arm, which has been transformed into a nonprofit called “Organizing for America.”
Four years ago, Obama largely retired his legions of volunteers in the first few months of 2009 by folding his campaign apparatus into the DNC, where it remained dormant while the administration struggled to cut insider deals to pass legislation. In 2013, expect to see Obama supporters engaged on multiple policy arenas, from climate change to immigration to gun regulations to the debt ceiling.
For Obama’s second term, even with a weaker position given the composition of Congress, he may succeed by returning to his community-organizing roots — a recognition that social movements are an essential component in advancing progressive reforms over corporate or partisan opposition.
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