The fragile and faltering state of American democracy.
Despite their virtues, many conservative Republicans have an unfortunate habit of picking on the weak and disadvantaged, slandering the people least able to fight back. We saw a glimpse of this callousness in Mitt Romney’s disparagement of the “47 percent” who are “takers” living off the hard-working “makers.” The newly empowered GOP majority in Congress is going down the same road—targeting the millions of sick or injured Americans who receive Social Security disability payments.
This is a favorite old canard of self-righteous right-wingers. They label these unfortunate people as shiftless and suggest none too subtly that many are faking their injuries and illnesses. The GOP has been pushing this cold-hearted slander for at least thirty-five years, ever since the glorious reign of Ronald Reagan in the 1980s (who remembers Reagan’s imaginary “Welfare Queen” who drove to pick up her welfare check in a Cadillac?).
McConnell-Boehner Republicans are now reviving the Gipper’s big lie, claiming the Social Security system is in crisis because of swollen disability benefits. Allegedly to save the system, these so-called fiscal conservatives intend to cut benefits and throw out those supposedly able-bodied slackers. Once again, their facts are bogus. Never mind, their story line is concocted to arouse anti-government resentment among people who are themselves strapped for income.
This is why we need “bleeding-heart liberals”—politicians who will stand up to defend the scorned and tell the truth about the Republicans’ propaganda. This season, the country has two tough-minded senators assuming that role—Sherrod Brown of Ohio and Bernie Sanders of Vermont. Sanders is ranking member of the Senate Budget Committee and Brown is ranking member of the Finance Committee’s subcommittee on Social Security. They will be heard in Washington. Given broad public support, they can smash Mitch McConnell’s plot to disable and maybe destroy Social Security.
Some quick facts Senator Brown and Senator Sanders have put before their Republican colleagues: disability insurance goes to nearly 11 million Americans, including more than 2 million veterans and 1.8 million children. Like Social Security retirement, this is an insurance program that workers have paid into with their FICA deductions. Nobody gets rich on disability. The average benefit is less than $1,200 a month, and for 30 percent of beneficiaries that is their entire income. The GOP’s ploy, an accounting rule change already adopted by House Republicans, would set up the disability system for a 19 percent reduction in benefit payments, casting millions into official poverty status.
The legendary fraud that Republicans claim to bemoan is itself a giant lie. The Government Accounting Office and the Social Security’s own inspector general have both found that fraud in this program is less than 1 percent. Compare that to fraud committed by Pentagon contractors, by too-big-to-fail bankers, by auto companies concealing deadly flaws in cars, by elected politicians or by newspaper reporters.
Both Sanders and Brown make the same accusation. The alleged problem with disability funding, Senator Sanders said, is a “manufactured crisis which is part of the long-term Republican agenda of trying to cut Social Security.” Senator Brown said, “Attacking disability insurance is only the first salvo in the Republicans’ plan to attack social insurance and make harmful cuts to Social Security.” The GOP created a false shortfall for disability benefits by blocking an accounting reallocation that is so routine it has been made eleven times in the past under presidents Johnson, Nixon, Carter, Reagan and Clinton.
But here is my question for the Washington press corps. Why aren’t reporters writing about this? Why don’t they examine the Brown and Sanders analysis and determine if their accusations are correct? Instead of writing endless dope stories about a presidential campaign in 2016 and what might happen a year from now, shouldn’t the news media be alerting people to the fight over Social Security the GOP is starting in early 2015?
The dysfunction of Washington involves the failure of major media to examine the gritty politics of issues that truly matter to citizens. Political reporters typically find these subjects boring, and reporters who cover the candidates and campaign usually don’t know that much about how government really works. Both political parties work on warping the subjects by feeding pre-tested clichés and avoiding hot-button issues. The messaging thus reduces campaigns to empty slogans and opacque generalities.
Count up all the thumb-sucker articles you have read about wannabe Republicans touring Iowa. Then count how many stories you saw about the GOP plot to gut Social Security. The answer, I suspect, is none. The media failure pretty much guarantees the vapid content of campaigns and silly debates over whose slogan is more misleading. Reporters are safe to ignore substantive governing issues (except maybe going to war in the Ukraine or bombing Iran), but governing issues are what actual people mostly care about most.
I am reminded of an earlier era when the press was less manipulated by political handlers and reporters were more aggressive about breaking stories without permission from their official sources.
When Ronald Reagan came to town back in 1981, he ran into an unexpected media buzzsaw named Spencer Rich, who was a colleague of mine at The Washington Post. A fellow Post editor dubbed Spencer Rich “the Ferret” because Spencer was a relentless digger of facts who repeatedly drove the Reagan White House nuts. His stories revealed insider details of what programs the new president intended to launch or old programs he planned to destroy. Spencer wasn’t really interested in the political horse race, but he understood the substance of government’s many parts and he did care about how government functioned. As it happens, so do ordinary citizens.
One of Spencer’s front-page exclusives revealed the Gipper’s plan to whack Social Security Disability Insurance. Republicans, he discovered, planned to denounce the liberal program as a scandal of fraud and waste. A fire storm of controversy erupted after his story appeared. The White House first denied it. Then the White House confirmed the story but said the facts were wrong. On the third or fourth day, the White House announced the program was snuffed.
This is what makes a free press so valuable to democracy—that is, if the reporters are truly free. I yearn to see a reporter with the courage to call out liars.
Some white politicians in the state of Alabama evidently want to reopen the Civil War, only this time their “lost cause” is not defending slavery but prohibiting gay marriage. The chief justice of Alabama’s state Supreme Court, Roy “Ten Commandments” Moore, has ordered county judges to ignore the ruling of a US federal judge and refuse to grant marriage licenses to same-sex couples. Fifty-two of the state’s sixty-seven counties obeyed his order.
This is last-ditch resistance against social progress and sure to fail. But it is not a laughing matter. It begs a crucial question that must be asked of all those ambitious candidates who want to run for the Republican presidential nomination in 2016. Which side are you on?
I suggest political reporters of the national press corps—so eager to start covering the horse race twenty-two months before the election—should find out where these guys stand. Do people like Scott Walker of Wisconsin or Bobby Jindal of Louisiana or Lindsay Graham of South Carolina embrace the South’s hoary doctrine of states’ rights on gay marriage? Or do they accept the primacy of federal law and the US Supreme Court in this matter? If reporters don’t ask the question, the press fails its duty to the public.
We do not need another war of rebellion to settle the issue. The press can simply revive President Lincoln’s loyalty oath, the one required of Southern renegades seeking a pardon during the Civil War. Reporters should pin down the GOP wannabes, one by one. In the matter of gay marriage, do you promise to “faithfully support, protect and defend the Constitution of the United States and the union of the states thereunder?”
Tell the truth, no weasel-wording allowed. We know of course that the Republicans are pretty much in agreement in opposing gay marriage. If there are any supporters of gay marriage in their ranks, they apparently keep it to themselves.
But that’s not the question. The question is: Will they accept the law and enforce it if elected president? They should declare themselves now. Before it is too late.
The last-ditch opponents of gay rights who like Chief Justice Moore claim the Ten Commandments as higher legal authority will argue that the US Supreme Court has not yet made a final ruling on the issue. Their point is technically correct but irrelevant. Even Justice Clarence Thomas—Mr. Last Ditch himself on the Supreme Court—has bitterly conceded that his colleagues are going to decide shortly in favor of upholding the constitutional rights of gays.
In the meantime, we should all honor those fifteen probate judges in Alabama who told their state’s chief justice to suck an egg. Let the joyous weddings begin.
Read Next: William Greider on Obama’s path toward economic catastrophe
Disregard the happy talk from the Obama White House. The stagnant global economy remains at the precipice of something worse unfolding—full-blown deflation. And the so-called recovery in the US economy remains shaky, despite good employment numbers. Here and abroad, the governing authorities seem to have forgotten the most basic nature of our situation. We live now in a globalized economy where one nation’s cold can lead to another country’s heart attack. Their ignorance is shocking, but also dangerous.
In fact, the US and other leading economies are beginning to mimic some of the same grave errors governments committed in the distant past, circa 1929, when spreading collapses of banks and financial markets morphed into the Great Depression. I am not predicting such a catastrophic outcome, not yet anyway. But the risk is present. The road to the Great Depression was paved with similarly myopic strategies. This president is not Herbert Hoover. But he might someday be remembered as Wrong-Way Obama.
The misdirection of government power suggests that many leaders don’t believe things were changed that much by the breakdown of 2007. They are still looking backwards, complacently doing the same stuff that failed sixty and eighty years ago.
First, the United States finds itself once again attempting to be the “locomotive” that pulls the rest of the world out of the ditch. America has done this successfully many times in prior decades to help allies get well. The problem is, the American economy is now much weaker and more wobbly itself, deeply indebted after thirty years of trade deficits and costly wars. There’s a lot less US excess to spread around.
Second, important trading partners—Japan, China, others in Asia—are employing a nasty trade strategy from the early thirties known as “beggar thy neighbor.” They are weakening the value of their own currencies (and boosting the dollar’s value) so their exports will be cheaper than competing American products. The US trade deficit is now rising steadily, especially in manufactured goods, and sure to worsen as other currencies weaken. That means losing good jobs and wages for Americans.
Clyde Prestowitz of the Economic Strategy Institute, a longtime critic of the lopsided trading system, observed: “The whole bloody world has somehow figured they are going to recover by selling exports to the US. While the world is depending on American demand, we are shipping more jobs and industry abroad but we can’t keep it going. I fear we are going to keep playing this game because we think we can get away with it.”
Prestowitz ticked off nations whose currencies have fallen in value—some as dramatically as 20 to 30 percent. They include Japan, China, Singapore, Australia, Canada and the European Central Bank. The ECB’s motive is legitimate—reducing interest rates to provide economic stimulus and fend off deflation—but the economic consequences are the same—more downward pressure on US production and employment. Japan’s currency manipulation cost 896,000 US jobs in 2013, according to the Economic Policy Institute.
Third, President Obama appears oblivious to these changed circumstances. The evidence is his insistence that he wants to approve yet another free-trade agreement, this time with eleven other nations in the Trans-Pacific Partnership (some of which are gaming their currencies to increase their exports to America). The administration has made extravagant claims that this will create something like 650,000 new jobs in America. Similar promises were made before previous trade agreements, starting with NAFTA in 1993, and all proved bogus.
The Washington Post, a hearty advocate of free-trade agreements, blew a big hole in Obama’s promise. Glenn Kessler, the Post’s fact-checker, chased down the statistics and discovered that White House experts essentially made up the numbers themselves. It was what you call a “back-of-the-envelope” estimate, but this one was written on toilet paper. Kessler was quite harsh in his judgment. He concluded: “Our advice remains: be wary whenever a politician claims a policy will yield bountiful jobs. In this case, the correct number is zero, not 650,000, according to the very study used to calculate this number. Administration officials earn four Pinocchios for their fishy math.”
Finally, Congress will be asked to approve this new TPP concoction, but many Democrats and some Republicans are resisting on the grounds that it does not include a serious provision for stopping these currency manipulations by other nations. Their real intention, I suspect, is to kill the TPP agreement, since they know other countries would walk away if that issue is included. I am for killing TPP myself. But there are crucial flaws in focusing on currency manipulations as the reason. For one thing, it would shrink still further the sovereignty of nation states (including the United States) to manage their own financial systems. Globalization has already crippled governing rights of people and transferred power to the multinational banks and corporations. The world doesn’t need more of that.
My more fundamental objection is that a far more important imperative at this hour is to generate worldwide recovery and that requires a cooperative agenda for shared relief and aggressive stimulus—not more dog fights between central banks and governments or rival political ideologies. The fundamental problem blocking recovery is the shortage of consumer demand (too many factories, too few customers) and over-bearing abundance of debt. A real program for recovery would have nations joining to confront those two in a big way.
First, bang on the creditors and governments to make them write off lots of debt, especially for folks who need it to survive. The United States did a little of this but not enough. Obama was more generous with guilty bankers than he was with the borrowers they swindled.
Second, create jobs—real jobs with real incomes for real people (not abstract estimates by economists). Governments and stores of private wealth must be coaxed or compelled to finance big-scale projects of many kinds, the projects that create real jobs, real incomes. The Federal Reserve should get credit for staving off collapse but its monetary stimulus did not succeed in generating a genuine recovery. Europe, now in more desperate straits, is attempting to mimic the Fed, but I expect it will not do any better. The financial guys caused this disaster but they have proved they are incapable of correcting their sins or healing the society. Obama, unfortunately, listened to the money guys. This is why I fear the president may get a “wrong-way Obama” judgment from history. Surrounded by Wall Street expertise and conventional political actors, he didn’t understand the larger bonfire raging in the global economy or else was persuaded not to take it seriously.
The next president will have to begin the great task of understanding what went wrong in the global system and reformulating its rules and functions in profound ways. Otherwise, we may limp along like this for quite a long time. Or things could get worse.
I have a legal question citizens of New York might wish to ponder. What is the difference between Sheldon Silver and Jamie Dimon? Representative Silver is speaker of the State Assembly in Albany, and federal prosecutors want to put him in prison for taking kickbacks for doing political favors. Dimon is CEO of JPMorgan Chase, the nation’s largest bank, which has richly rewarded him for political manipulations that saved the megabank billions in regulatory fines for defrauding investors and saved fellow bankers from criminal prosecution.
Something about this comparison doesn’t smell right.
“Shelly” Silver is accused of steering plaintiffs to two law firms who sue big companies in behalf of people injured by asbestos or other cancer-causing substances. He arranged state research money for a couple of nonprofit health projects that deal with such issues, In return, the indictment charges, Silver received $3 or $4 million spread over ten or fifteen years. As political corruption goes, this is pretty small beer.
Jamie Dimon, by contrast, is political nobility, a leader of the Wall Street gang that raped the nation (financially). Trillions were lost by millions of families in the mortgage-securities racket that brought down the US economy. Dimon’s kickbacks were from his board of directors, grateful that he used his skill and influence to dodge the legal consequences.
Yet when it came time to punish financial wrongdoers, the scandal did not go before a grand jury. Dimon instead sent squads of corporate lawyers to negotiate with the government on how much the bank was willing to pay for its misdeeds (Dimon called them “mistakes”). When the negotiations stalled, Dimon traveled to Washington for a personal conversation with the attorney general. The final deal announced by Eric Holder was a bit fraudulent itself. Holder claimed to have won a record penalty of $13 billion, but lawyers who read the fine print and did the accounting said it was actually closer to $6 billion—a pittance compared to the horrendous damage Wall Street bankers profitably did to the nation.
The sordid mismatch of crime and punishment was displayed in the pages of The New York Times, though the newspaper seemed unaware of its contradiction. The Times editorial page demanded Representative Silver’s immediate resignation, never mind the trial and jury verdict. US Attorney Preet Bharara accused Silver of holding “titanic political power.” the Times wanted a prompt hanging. Silver did not resign but did agree to delegate leadership to senior assembly members on a temporary basis. “I hope I will be vindicated,” he said.
Meanwhile, on the same day back in its business section, the Times was reporting that for his efforts Dimon would get “a sweeter pay package in 2015.” The board of directors decided Dimon’s total compensation would remain at $20 million and he would get $7.4 million in “easier-to-access cash” rather than restricted stock shares.
The business story said, “Among the directors, the people briefed on the matter said, Mr. Dimon has been bolstered by a widely held view that he took on a crucial role in JP Morgan’s settlements with the federal authorities.” The story said directors “see the government’s extraction of money from the banking industry as driven more by a desire to take a tough line against Wall Street than any actual problems at the banks.”
In other words, the boys at JPMorgan did not learn their lesson. They did not take the government’s complaints seriously because they assume Washington was just putting on a show to appease angry citizens. After all, $6 billion is a mere asterisk on JPMorgan’s balance sheet, although Dimon continues to whine in public about the unfairness of the government regulators.
In fact, the Morgan Chase directors may be right about the feds. Matt Taibbi of Rolling Stone wrote a blistering critique of Holder’s claim that criminal prosecutions still might be possible. The AG gave a tortured explanation of how difficult it is to pin down individual responsibility in corporations. “Responsibility remains so diffuse and top executives are so insulated,” Holder told an NYU audience, “That any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.”
Taibbi responded: “In other words, people don’t commit crimes, corporate culture commits crimes!” Perhaps Sheldon Silver’s lawyers should put the blame on New York political culture.
I should acknowledge my own bias in this matter. I have family (children and grandchildren) who live in Sheldon Silver’s Assembly District 65 on the Lower East Side. They are not naïve and they oppose corruption. But they also see “Shelly” Silver as a pretty good guy. He plays hard ball in behalf of certain interests and issues, they know, but he also involves himself in stuff that matters to ordinary people, like defending rent-control apartments against the ever-encroaching grasp of the real-estate lobby.
Shelly Silver lives in their neighborhood, and not in grand style, contrary to the heated insinuations of editorial writers. During Hurricane Sandy, when power was out, trucks showed up around Grand Street, where people could recharge cell phones and laptops. Without really knowing, residents heard or just assumed that Representative Silver had something to do with that.
In the legislature, he pushed the gay rights legislation, but also the default speed limit of twenty-five miles per hour so old folks and joggers could cross broad streets without getting run over. He demanded more building space for the new downtown high school my grandson attends. Shelly legislated a school holiday for the Lunar New Year (2015 is the Year of the Sheep), so Chinese kids could stay home and celebrate with their families without being recorded as absent. These are small matters, but people notice and remember.
Farther south, Silver’s district also includes the financial district. Like most New York politicians, Representative Silver attends to Wall Street too. But he is an old-school politician, and the tension between neighborhood life and powerful money interests is a very old conflict in New York politics, still very active in current events.
Silver’s reputation as the powerful boss who looks out for the folks is a model descended from the olden days of the Tammany machine but also the great social reform movements that arose on the Lower East Side in the early twentieth century—the popular politics that eventually evolved into the liberal-labor agenda of the New Deal era.
Tammany Democrats used to speak unapologetically of “honest graft,” which meant politicians could take care of the public interest and take care of their own interests without legal contradiction. Of course, many bandits hid gross corruption behind that logic. But determining criminal motivation is not as self-evident as righteous prosecutors assert. The overly zealous pursuit of bad guys might “criminalize” what is the standard practice of bartering and trading in everyday politics.
The US Attorney must have noticed, for example, that a lot of money changes hands in politics—big money given to politicians by private interests—and a lot of that money comes from Jamie Dimon’s gang. These exchanges are called “campaign contributions” but that dodges the real question: What’s being bought and sold? Is Jamie Dimon bartering private deals with our elected representatives over how public funds will be spent or which laws will be altered to benefit Dimon’s bank? Of course he is. We just don’t know what he is buying or selling.
The US Attorney for Lower Manhattan should convene a grand jury to explore these questions, because very little is ever revealed about the dark-side transactions. The FBI, as it sometimes does with criminals it has caught, should put a “wire” on some middle-level bankers and collect recorded glimpses of who’s trading away public assets behind closed doors—deals more secretive than anything Shelly Silver engineered.
Of course, that kind of investigation won’t happen. The corporate justices who control the Supreme Court would never allow it. Examining the private motives behind Wall Street’s political manipulations would violate the free-speech rights of Jamie Dimon and his crowd. Money is speech, the Court says. Therefore, the more money that pours into the hands of politicians from the corporates the better our democracy will become. What a hoot.
My essential question is this: Who gets to decide how public resources are going to be spent or which laws should be altered to satisfy certain private interests? Democracy promises (in theory) that the people have a right to participate in the decisions governing their lives.
But whatever the law and Constitution require, these decisions will in the end always be determined by people, mere mortals who may get things wrong and will always be influenced by self-interested motivations. That applies to elected representatives like Sheldon Silver. But it also applies to private bankers like Jamie Dimon, whose gang expends billions to buy members of Congress and high-level government appointees and to field thousands of lobbyists who help rewrite the laws for us to observe. Democracy’s promise is still unfulfilled, but people are working on it.
In this imperfect world, I would rather have the Shelly Silvers decide things than the Jamie Dimons.
Read Next: Can Wall Street take down Big Pharma?
Here is a man-bites-dog story that might give comfort to those many Americans being gouged by the drug industry’s larcenous prices. A Dallas hedge-fund operator named Kyle Bass who made a fortune attacking over-priced stocks now says he is going to attack Big Pharma for over-pricing drugs. Bass’s announcement set financial industry bloggers aflutter because hedge funds are not usually known for public-spirited motives. Citizen Bass is in it for the money, of course. But he intends to do well himself by doing good for the rest of us.
His firm, Hayman Capital Management, won fame and fortune back in 2008 by “shorting” mortgage securities just before the crash. Bass recognized those packages of mortgage bonds would crash once investors realized the banks were peddling phony paper with false valuations. Now he wants to do roughly the same for fifteen pharmaceutical firms selling drugs based on phony patents.
“The companies that are expanding patents by simply changing the dosage or the way they are packaging something are going to get knee-capped,” Bass boasted. This may make him rich all over again and fellow investors he recruits for Hayman Capital. But Bass added, “This is going to lower drug prices for Medicare and for everyone.”
For industrial sectors like drugs, the mangled US patent system has become a well-known scandal—a sick joke in which lawyers and lobbyists get the last laugh. Through political manipulations in Congress, leading companies win the power to double or triple prices by extending their legal claims to exclusive production of widely prescribed and essential drugs. Normally, the patent expires after twenty years or so and generic substitutes come on the market with much cheaper prices.
Inventive capitalism finds ways to subvert this system. A drug company will reformulate a new version of the old drug and claim a new patent that renews their protection from competition. Or the big company essentially bribes or buys the smaller upstart rival that is threatening to upset its monopoly pricing. This is called “pay for delay”—a reverse patent settlement that gets challengers to postpone their intervention. These gambits are ostensibly legal, but an aggressive government would put a stop to them if it put the public interest ahead of drug profits.
Big, big money is at stake. Bass says the inflated stock prices of fifteen large drug companies reflect a combined capitalization of $450 billion. He wants to poke a hole in that balloon. Short-sellers like himself could reduce that by half, he thinks, as stock market investors begin to grasp that company profits are derived from fallacious patents. Hayman Capital intends to show them.
“We’ve dedicated half of our resources over the past six months to this,” he told an investment conference in Oslo, Norway. “We are going to challenge and invalidate patents through the Inter Partes Review process…[and] we are not going to settle.”
The IPR process was created in 2012 at the behest of big technology companies fighting off copy-cat producers in laborious and costly lawsuits. The new rules create a fast track for challenging dubious claims, instead of the court cases that can take years to resolve, postponing rulings and eroding profits in the meantime. Bass and possibly others have come to realize you don’t have to be a drug company to use this new system to great advantage.
Could Wall Street buccaneers force Big Pharma to clean up its act? Bass is not naming any corporate names or yet revealing his strategy. But he clearly is taking aim at a monstrous public injury. Just the other day, Peter Bach, a physician and director of health policy at Sloan Kettering Cancer Center, had an op-ed in The New York Times bemoaning the pain and injury of outrageous drug prices for patients and healthcare providers.
Drug companies, Bach explained, not only suppress cheaper competitors but keep raising their own prices. In 2001, he said, Novartis charged $4,540 a month for a leukemia drug called Gleevec. Now it charges $8,488. Or drug companies simply buy up cheaper generic brands and raise their prices. Albendazole, a drug for parasitic infections, was approved in 1996 and sold for only $5.92 per day as recently as 2010. Three years later, the wholesale price was $119.
The Obama administration “reformed” the healthcare system to reduce costs but somehow managed to overlook drug prices. Of course, Europeans get the very same drugs, only much cheaper. As Bach cited, prescription drug prices in Europe are 50 percent cheaper than what Americans pay. The Novartis drug Gleevec sells here for $8,488, but costs $4,500 in Germany and only $3,300 in France.
But, hey, we Americans get to have a “free market,” and they don’t.
The sordid business of closing out the do-nothing 113 Congress—giving the Wall Street bankers one more bite of the apple and a friendly kiss for the CIA torturers—has stained President Obama indelibly. We will never forget what he did and failed to do. He deserves our contempt. The president marginalized himself with his unreliable weakness.
The recent events in Washington are nonetheless clarifying. They tell us that the worst is yet to come. When McConnell-Boehner take charge of Congress in the New Year, the president will be standing with them on the wrong side of some fundamental issues, ready to make bad deals with the Republican wrecking crew.
In the past week, he lamely allowed the CIA to carry on as though the criminal behavior of torturers was merely a policy mistake. He called them “patriots.” History will recognize this is a damaging lie that undermines our nation’s values, not to mention our reputation.
Simultaneously, Obama collaborated in the piecemeal destruction of his own financial reform legislation. His White House advisers are no doubt surprised by the bitter objections, since they are Wall Street–trained themselves and think it is no big deal to give a regulatory break to JPMorgan Chase, Citigroup and other malefactors of wealth. Besides, they explain, the president got more money for little children and the poor.
Obama will doubtless make other bad trade-offs in the final two years of his presidency, but he has already defined his own irrelevance. Harry Reid and Mitch McConnell will do the deal-making between them, joined by House Speaker John Boehner and a few old salty dogs from both parties. The president will be kept informed. At every step, he will tell himself this was the best he could get.
The congressional showdown, however, has given us an exciting glimpse of what the future might look like if Representative Nancy Pelosi and Senator Elizabeth Warren lead the way for a liberal insurgency. Both stood up and fired back at the stink of what Obama and many Dems had accepted. Warren and Pelosi did not personally attack their party’s doggedly passive president. But both essentially declared their independence from him. Their willingness to confront and counter the cynicism that passes for policy debate is a hopeful marker for larger change ahead.
Their independent-minded opposition could be the start of something big now that the Dem party is in the wilderness again, wondering why they aren’t loved. Senator Warren has been trying to tell them for years. Pelosi is a team player who in the past went along with the Obama White House when she should have rebelled. Maybe the public will now hear more of her eloquent dissents. .
It’s a starting point only. No one should imagine either Pelosi and Warren or other like-minded Democrats have an army ready to march and restore meaning to the Democratic party. What they do have, however, makes them potentially powerful. They have authenticity and sophisticated knowledge. In different ways, both know how the corrupted political system does great damage to American life. It makes them disgusted too.
Mitch McConnell, the soon-to-be anointed Senate majority leader, wants a “mulligan” on Obamacare, and he’s counting on the Supreme Court to give him one. For those who are not golfers, a “mulligan” is getting a second chance when a duffer hits a lousy tee shot. In this case, McConnell means Republicans want to tear up the Affordable Care Act and rewrite it in their own terms. But the Republican-controlled Congress will not have the power to achieve this, so it wants the Supreme Court’s right-wingers to do the dirty work for them.
“Who may ultimately take it down is the Supreme Court of the United States,” McConnell told an audience of corporate CEOs assembled by Murdock’s Wall Street Journal. In that event, McConnell explained, “I would assume that you could have a mulligan here, a major do-over of the whole thing.”
His cynical expectations seem to confirm the illegitimate power alliance elected Republicans have fashioned with the supposedly non-political Supreme Court justices. But McConnell tucked an awkward message in his comments—an admission of his own weakness.
Forget his blustery campaign vows to destroy the ACA, which McConnell falsely characterized as an effort to “Europeanize” American healthcare (too bad that’s not the case). McConnell is belatedly conceding the GOP still won’t have the votes to break Senate filibusters or to override Obama vetoes in House or Senate. Has Mighty Mitch begun to mellow?
Throughout the Obama era, he starred as the belligerent Senator No, uncompromising and grimly effective. He and his party smeared Obama relentlessly, both the person and his policies, often with latent racial coding. But McConnell told the captains of industry the only hope for unraveling Obamacare depends upon Chief Justice John Roberts and the Right Wing Five.
The political landscape for 2015 is not about a nicer Mitch, but about the utter reversal of political priorities confronting the triumphant Republican party. To put it crudely, Mitch McConnell is like the dog who caught the bus he was chasing. What’s he going to do with it? The reactionary factions in his backward-leaning party are eager for a grand ideological tear-down; but most folks are looking for shelter from the storm, not more chaos and upheaval.
I suspect Mitch McConnell recognizes this. That’s why he wants the Supreme Court to step up and take the blame for dismantling Obamacare. That’s why he is suggesting small-ball legislative tactics—unravel ACA one step at a time, repealing the medical devices tax or the thirty-hour-week coverage for small business workers or other unpopular provisions like the health-insurance tax and penalty. These issues might pose tough votes for Senate Democrats even if Obama intends to veto them.
McConnell’s first problem, however, is persuading the “red hots” in his own party to slow down. In their overwrought opposition, House Republicans “repealed” Obamacare something like fifty times (a free vote for them, since they knew their negative measures were not going anywhere). Trouble is, Republicans fell in love with their own propaganda. People “hate” Obamacare, don’t they? Isn’t that why Republicans won their big victory? Surely, the populace will cheer when the GOP slays this dreaded socialist monster.
They are dangerously mistaken. The “smart politics” that won elections for Republicans could suddenly look like very dumb governing policy if McConnell and company actually go ahead and do what they promised to do. The first result will be a major crisis in government if the complicated wiring of the ACA is suddenly torn out. But the much larger political crisis will be the personal shock and injury experienced by many millions of American families who discover the government has just cancelled their health insurance. Likewise, the insurance industry would be in turmoil, with companies scurrying to protect themselves if the ACA’s delicate framework of subsidies and insurance premiums is abruptly thrown out of balance.
Who would most likely be blamed for the pain and chaos? Republicans, I predict, whether they are the right-wing justices on the Roberts Court or the GOP majorities in House and Senate. McConnell and House Speaker John Boehner seem to assume that, if the Supreme Court disables Obamacare, that will force the need for new legislation and their new majority power can dictate the terms. They’ve got it backwards.
If the right-wingers provoke this national crisis, trying to reverse the legislative battle they lost five years ago, President Obama will have the high ground once again. He can explain what happened in the clearest terms: the McConnell Republicans or the Roberts Republicans on the Supreme Court did this to them. Yes, there are problems with the ACA that need to be fixed. But it was impossible to make ordinary corrections because Mighty Mitch always refused to cooperate and compromise.
Now the McConnell co-conspirators in Congress and the High Court want to throw the American people back to the wolves—the insurance industry and drug industry and other special interests that gouged or neglected very ill people before Obama’s healthcare reforms stopped them from cherry-picking their customers. In fact, healthcare companies were treated quite generously by the ACA. Insurers were essentially given millions of new paying customers subsidized by the federal government. In exchange the companies had to abandon cruel practices like banning customers with pre-existing conditions.
I bumped into an old friend who happens to be an industry lobbyist and asked him: Who will get the political blame if the Roberts Court kills Obamacare? “The Supreme Court could turn the country upside down on this issue,” he said. He loathes the ACA and knows its flaws, but said that if you are going to take something away from people, you better have something to replace it.
A victory for Mitch (or the Right-Wing Five on the Supreme Court) is basically a decision to restore the old healthcare system that profitably abused or ignored so many sick people and poor people. That political decision is for elected politicians, not jurists. If McConnell doesn’t have the votes or the nerve to force the issue, the Supremes should keep hands off. Chief Justice John Roberts upheld the ACA’s constitutionality two years ago and was bitterly denounced as a sellout by many right-wingers (though not by McConnell, who has been closely aligned with Supreme Court conservatives on its money-in-politics decisions). Now right-wingers are pushing Roberts to make up for his “error” by killing Obamacare on ridiculous grounds. McConnell has joined them.
This squeeze play could be fateful for the chief justice and his lasting reputation. As I wrote recently, he is flirting with an “impeach John Roberts” campaign if he cooperates with politicians like McConnell. Roberts is clearly sensitive to the accusations of political bias and has frequently objected. That’s why it is so important for people to make loud complaints now and make sure Roberts hears them. Precious purists will object that this politicizes the Supreme Court, but it is already politicized. The deed was done by the Right-Wing Five and their Republican party.
The new post-election landscape challenges another familiar political deformity—the passivity of the Democratic party. We can understand why the president is reluctant to aim critical comments at the Supreme Court. But why are other Democrats and allied groups so silent? If they fear the political fix is in at the Supreme Court, they should say so now, not wait until a decision that sets off the chaos and crisis. Deferring to the White House is not an excuse. Indeed, that is a familiar element of the party’s decrepitude—hiding behind the president, failing to resist dumb politics from the White House.
This will sound naïve, but a modest first step toward Democratic revival should involve telling the truth a little more often about the party’s intentions. The mess in healthcare reform is a ghastly example of why. The White House couldn’t admit that Obama’s ACA was really a copy-cat version of moderate Republican ideas. Republicans pretended Obama’s plan was socialism. From these initial fictions, the two parties stacked up simple-minded distortions and evasions. The sincere result was Rube Goldberg complexity.
Yet what never a got serious debate was the “public option,” though a majority of House Democrats favored it. That would have authorized genuine trials for the “single-payer” systems resembling the ones functioning in Europe. Obama killed those alternatives or traded them away to conservative lawmakers. If the Roberts Court decides to destroy Obamacare beyond repair (I hope it doesn’t), Democrats should start over and this time tell the truth about what they think and what they want.
The death of Nancy Teeters was properly noted last week (November 17), since she was the very first woman to serve as a governor on the Federal Reserve Board in Washington. But I remember Teeters for more poignant and powerful reasons—her personal courage in stubbornly resisting the harsh and devastating recession the Fed imposed on Americans.
This was thirty years ago in the early 1980s when Paul Volcker was the formidable Fed chairman and his conservative convictions triumphed. Volcker is remembered reverently in the annals of finance for saving the country from inflation. Nancy Teeters, the lonely dissenter, was soon forgotten but she understood some things about human society and arrogant power that her male colleagues failed to appreciate.
Those long-ago events during the Reagan presidency were at the dawn of the conservative era and—due especially to the Federal Reserve—began the triumph of finance capital over the broader economy. I wrote a book in 1987 that described the historic watershed, called Secrets of the Temple: How the Federal Reserve Runs the Country. Teeters was right. If other Fed governors had listened, this country might have been saved from a lot of pointless pain.
This is what I said about her unique role:
Nancy Teeters, almost alone, resisted. Month after month, as the economy spiraled downward, she repeatedly urged her colleagues to back off. The largest corporations were shutting down more and more of their production. As loan failures accumulated, the financial sector was threatened with crisis. The Fed’s single-mindedness, she warned, was inflicting deep wounds that would not soon be healed.
“I gave the Federal Open Market Committee a lecture.” Teeters said. “I told them: You are pulling the financial fabric of this country so tight that it’s going to rip. You should understand that once you tear a piece of fabric, it’s very difficult, almost impossible, to put it back together again.”
Her metaphor, she pointed out to me, was understood by women. “None of these guys has ever sewn anything in his life,” Teeters said. [page 465]
The objections she expressed thirty years ago in the closed-door meetings of the Federal Reserve Board of Governors are still highly relevant to our current national condition. The “social fabric” has been torn asunder, first by Volcker’s deep recession, then by deregulation and Wall Street’s high-risk adventures, and then by globalization and finance capital’s hegemony over labor and production. These destabilizing forces led eventually to the collapse. They are driving the grinding deterioration that continues to afflict the society.
Contemporary politics is still blind to the gravity of our situation. Even the Democratic president is still resisting the kind of big, bold actions that Keynesian economists like Nancy Teeters might have proposed in these circumstances. Defending the “social fabric” remains an inadmissible argument in the mechanistic logic of conventional economics. As Teeters argued then, innocent people are being sacrificed to crude abstractions. Meanwhile, some people are still getting richer and most other people are still getting poorer.
There is one great change in the landscape, however. The Federal Reserve Board is now chaired by a woman. Janet Yellen is perhaps not so upfront in her social concerns as Nancy Teeters was, but she is clearly trying to move the boys in that direction. Yellen met recently with a network of activist community organizations who are pushing for concrete action on work and wages. If the very masculine Federal Reserve can break free of the reactionary past, maybe there is hope for the country.
Republicans like to talk about impeaching President Obama, but there is a far more deserving candidate for impeachment—Chief Justice John Roberts of the Supreme Court. While the Republicans in Congress have blocked Democrats from enacting much of substance, the GOP majority in control of the Court has been effectively legislating on its own, following an agenda neatly aligned with their conservative party. Step by step, the five right-wing justices are transforming the terms of the American political system—including the Constitution.
They empowered “dark money” in politics and produced the $4 billion by-election of 2014. They assigned spiritual values to soulless corporations who thus gained First Amendment protection of free speech and religion. The justices effectively gutted the Voting Rights Act of 1965, even as they allowed state governments to create new obstacles for minority voting. The High Court made it okay to take guns to church and more difficult to keep guns from dangerous people. It rendered a series of decisions that collectively shifted political power from the many to the few.
This power grab by the unelected—and supposedly non-partisan—justices has already produced a historic rewrite of America democracy. But it was done by blatantly usurping the decision-making authority that belongs to the elected government in Congress and the executive branch. The Republican justices are not finished with their undeclared revolution. They will continue unless and until people rise up and stop them.
The Roberts Court’s latest target is once again President Obama’s singular achievement, the Affordable Care Act. Under peculiar circumstances just three days after the midterm elections, the Court announced it will hear another legal challenge that threatens to disable and perhaps destroy the new healthcare system.
The timing of this new intervention has a distinct odor of political collusion. The Republican takeover of the Senate is already invoked by Court allies to suggest the justices are merely responding to the will of the people. Some conservative Court watchers tout the new case as a chance for the chief justice to make amends and get with the program. The latest challenge was fashioned in Washington by the same club of right-wing legal foundations and pricey corporate lawyers who have been attacking affirmative action and other liberal reforms since the Reagan administration.
Michael Carvin of the Jones Day law firm is a cocky veteran of the right’s long crusade and the lead lawyer for the new case. He is already boasting of the outcome, even though the intermediate DC Circuit Court of Appeals has not yet ruled up or down as would normally occur before the Supreme Court agreed to consider it. Carvin dismissed the DC Circuit Court, now dominated by Democratic appointees, as a meaningless anomaly. He told a Talking Points Memo reporter he doubts that Supreme Court conservatives “are going to give much of a damn about what a bunch of Obama appointees on the DC Circuit think.” Goodbye to deference and regular order.
But might Carvin’s case still lose at the Supreme Court? “Oh, I don’t think so,” he said. That was his cute way of saying this time Chief Justice Roberts will be on board with the other four conservative justices. Carvin didn’t say why he is so confident, but he and Roberts seem to be old chums. At a Federalist Society event last year, Michael Carvin indulged in a bit of classy namedropping. The admiring conservative society reported that Carvin “told an anecdote in which Chief Justice Roberts approached him and jokingly chided him for having favored appointing Samuel Alito before Roberts.” What does this say about their relationship? Maybe nothing, but one would like to ask a few follow-up questions.
Roberts himself takes offense at accusations that the Roberts Court renders politicized decisions. He has frequently denied the charge. “We’re not Republicans or Democrats,” Roberts told students at the University of Nebraska law school. Unlike some of his right-wing colleagues, Roberts wants to have it both ways. He’s not an ideologue, just an earnest umpire calling balls and strikes.
Baloney. If Carvin and other conservative legal eagles are correct that this time the Chief Justice will rule against the healthcare law, that should give people a prima facie case for considering impeachment. At a minimum, people should demand a thorough public investigation into whether surreptitious political interference occurred (who said what to whom offstage?). If politicians are reluctant to go down that road, people can start their own inquiries. The chief justice should be forewarned what will likely happen if he does scuttle the ACA. I expect “Impeach John Roberts” signs and billboards to start popping up all over America as people finally figure out who did this to them. Hint: it was not Barack Obama.
A prime witness should be Linda Greenhouse, who for decades was the influential New York Times correspondent covering the Supreme Court (now at Yale law school). Greenhouse was admired for her fair-minded analysis and great clarity in explaining esoteric legal arguments, She finds the current state of affairs “profoundly depressing.”
Greenhouse explained in her blog posted at NYTimes.com: “In decades of court-watching, I have struggled—sometimes it seems against all odds—to maintain the belief that the Supreme Court really is a court and not just a collection of politicians in robes. This past week I found myself struggling against the impulse to say two words: I surrender.” (Linda Greenhouse has not herself called for impeachment.)
The new case against Obamacare reads like “a politically manufactured argument,” Greenhouse wrote. She called the maneuvering “a naked power grab by conservative justices who two years ago just missed killing the ACA in its cradle.” As evidence, she cited the unusual twists in Supreme Court behavior. Normally it waits to see if there are conflicting views among circuit courts of appeal before taking a case for consideration. This time, the Fourth Circuit based in Richmond, Virginia, upheld the law. The DC Circuit in Washington has all twelve judges reviewing and seems very likely to uphold the law, since that court is now top-heavy with Democratic appointees. The Supremes went ahead regardless.
Greenhouse cited Michael Carvin’s confident boasting as suggesting the political flavor. She also invoked remarks by Professor John Yoo of UC Berkeley—famous in Bush years as the “torture lawyer” who defended brutal interrogations and a former clerk for Justice Clarence Thomas. On National Review Online, Yoo felt sure Roberts will now support the ACA challenge because the case “gives him the chance to atone for his error upholding Obamacare.” Yoo wrote: “What judge can resist the chance to reach the right legal result, fix mistakes from the past and act with popular support? It’s a Supreme Court trifecta.”
Over-confident Republicans naturally assume the public will be grateful if the Supreme Court rescues them from Obama’s healthcare system. But the first result is bound to be utter chaos and confusion and millions of people—mostly in red states—who discover they are the losers. If the GOP legal challenge succeeds, the High Court will rule that the federal exchanges—created for states that declined to create their own state exchanges—operate illegally because the ACA does not give them explicit authority to dispense the tax credits that subsidize health insurance.
A blizzard of low- and moderate-income buyers of insurance would be suddenly stripped of government assistance—around 5.2 million of them. But there is a cruel twist Republican leaders fail to acknowledge: their own red-state constituents will be the most victimized. Leading right-wing politicians have endorsed the very lawsuit that will punish the Southern and Western states if it prevails, while blue states and northern cities that are operating their own state exchanges may not suffer at all.
The lawsuit now before the Supreme Court, for example, has been formally joined by Senators Cornyn and Cruz of Texas, Hatch and Lee of Utah, Portman of Ohio, Rubio of Florida, Representative Darrell Issa of California and the state governments of Oklahoma, Alabama, Georgia, West Virginia, Nebraska, South Carolina and Kansas. If these politicians win, their states are the big losers.
But of course the citizens who will be screwed in the red states are mostly working poor or moderate-income families. Republicans are okay with that. They ostensibly believe that belt-tightening helps build character. The GOP may have a time with blowback from the insurance industry and other providers in the healthcare system. While it’s not widely understood, many billions in federal subsidies help people of limited means buy health insurance but they never actually see the dollars themselves. The money flows directly from the Treasury to the private enterprises. Insurance lobbyists are already on the case, explaining real life to clueless conservatives.
Up to this point, I have barely mentioned the logic of the conservative assault on Affordable Care. Because there isn’t much logic to it. It depends entirely on a narrow-minded reading of the original legislation—so ridiculously literal that only gnomes in a medieval castle could take it seriously. In a nutshell, the right-wing lawyers claim that the law describes how state-run exchanges will be able to dispense federal subsidies to people in need, but the law fails to say explicitly that federal exchanges have the same powers.
Okay, the drafters could have repeated the requisite language to reassure fly-specking lawyers, but really there was never any doubt about the congressional intent. As the US Court of Appeals for the Fourth Circuit has ruled, the logic of the entire system over-rules any blurred language. The law says explicitly that the secretary of Health and Human Services has the authority to create federal exchanges when and where states don’t want to do it. In other times, any such ambiguity would have been quickly eliminated with a technical fix, routinely adopted by mutual consent.
But the new Republican Party refuses to go along with anything that resembles cooperation and might shine a good light on Democrats. What the right-wingers really hope to achieve is a total breakdown of the ACA’s complex architecture. Throw sticks in the spokes. Force the Obama administration to open the legislation for Republican tinkering. The Supreme Court appears to be pursuing a similar strategy In other words, right-wing senators want Supreme Court right-wingers to accomplish by edict what GOP legislators could not accomplish for themselves.
Barack Obama can win this fight by not giving in to the Supreme Court, even if he temporarily loses there. The president has to call out his opponents and tell the hard truth about their illegitimate abuse of power. People may listen if he genuinely fights for them.
People may recall the last time Americans wanted to impeach a Chief Justice was in the 1950s, when Earl Warren—a liberal Republican from California—championed Brown v. Board of Education in the long legal battle to defeat Jim Crow segregation. Chief Justice Roberts has been leading in the Court in the opposite direction. Instead of comforting the afflicted, he is comforting the comfortable.
Just when you thought the Republican slime-ballers had run out of muck, you discover, no, they have more mud to throw at honorable people. And they are not just smearing Barack Obama. This time, they are disparaging the doctors and scientists at the National Institutes of Health and depicting them as weak-willed tools of the Democratic Party. If Americans fall for this, they may get the government they deserve—stripped of honest science and trustworthy decisions.
Republicans are not stupid, but they are shameless. They know people are rattled by the stealthy emergence of Ebola and that media hype has reflexively pumped up the danger and public confusion. NIH experts calmly explained what has to be done to defeat the disease and assured nervous citizens that healthcare teams are on the case. The GOP saw opportunity in unfolding tragedy and rushed to exploit it.
A political hack named Ed Rogers, corporate lobbyist and White House insider under Republican presidents, chortled gleefully over the political twist. His op-ed in The Washington Post hailed the brave governors of New York and New Jersey—Democrat Cuomo and Republican Christie—for intervening with a common-sense response. Any doctor or nurse who had gone to West Africa to treat Ebola victims should be automatically locked up in quarantine when they return home.
Rogers boasted, “If there is a Republican wave in the elections next Tuesday, pundits may well claim that it fully formed when Christie and Cuomo decided to go their own way with an Ebola strategy, despite objections from the White House.” People will be reassured by their common-sense intervention, he said, because “voters don’t trust the president to do the right thing and they are less likely to vote for those who echo the president’s blasé response.”
Actually, this know-nothing attack was launched by two well-known cynics of politics, both of whom lust after presidential ambitions. What Ed Rogers left out of the slime ball aimed at Obama is that it actually smeared some of the most experienced, knowledgeable and principled employees of the federal government. The real question at stake is whether the GOP demagoguery will succeed in destroying yet another citadel of advanced science and public values.
Dr. Anthony Fauci, who played a significant role in the successful war against AIDS/HIV, has explained patiently and repeatedly why rigid quarantines of healthcare workers would actually increase the dangers. “The best way to protect the US is to stop the epidemic in Africa and we need those healthcare workers so we do not want to put them in a position where it makes it very, very uncomfortable for them to even volunteer.”
If political pollsters were more devoted to the public interest than their political clients, they would ask people this question: Whom do you most trust to handle the battle against Ebola—Dr. Fauci, the longtime leader of the national Institute of Allergy and Infectious Diseases, or Chris Christie, the author of political vendettas against Jersey mayors who failed to support him? Or do people think Andrew Cuomo knows more than Anthony Fauci about how to organize the global counterattack against this dread disease?
The questions sound ludicrous, but they need to be asked. Once these guys finish with New York and New Jersey, they want to run the country. Let me restate the question in a harsher way people can understand: Who do you think will manage to kill more people with Ebola—Dr. Fauci or Governors Cuomo and Christie, the political twins?
Senator Elizabeth Warren, as she often does, is pushing back hard against the irresponsible politicians. On CBS This Morning, she said Christie “should bring out his scientists who are advising him on that because we know that we want to be led by the science. That’s what’s going to keep people safe—science, not politics.”
She went further and suggested the Republican party may have blood on its hands because it has pushed hard to cut NIH spending and thus research on the Ebola virus. “So now we’re in a position where instead of making those investments upfront, we wait until people die and now we’re going to spend billions of dollars and some real risk to our country.”
Good question. Why don’t reporters ask Dr. Christie and Dr Cuomo?
Read Next: Misguided media hysteria pervades the 24/7 news cycle.