Welcome to the Plutocracy

PlutocracyAs you may have heard, the Supreme Court yesterday ruled in McCutcheon v. FEC that wealthy individuals cannot be limited in the overall amount they can give to political candidates. The First Amendment, which last time I checked does not mention money at all, allegedly now bars any limitation on the total amount of moola that rich folks can shovel in the direction of elected officials.

The 5-to-4 decision split along political lines and overturned decades of settled law, as well as many state limits grounded in anti-corruption principles. The majority decision is rife with such broad (and utterly daffy) generalizations about the nature of speech and political life that it also makes clear that the Court is frighteningly likely, in the not-so-distant future, to strike down any kind of contribution limit.

The former aggregate contribution limit of merely $123,000 per federal election was such a drag on my own political giving, as I’m sure it was on yours. I totally had more money than that saved up to spend on every election cycle (I’ve been clipping coupons!), and I’m glad to see that all that green stuff I have laying around in piles can finally go to good use buying influence for my pet projects.

In truth, out of a country of 314 million, only 1,300 people maxed out the prior cap on political contributions in the last election cycle. What a crisis! I can see why the Supremes thought this decision was worth their time.

Of course, some of these large donors may be cursing the outcome, as their phones are already ringing off the hook, and now they won’t be able to escape pols’ persistent dial-a-thons until they’ve dished out $3.2 million, or 30 times the old limit. As Lawrence Lessig put it on Diane Rehm this morning, the decision narrowed the number of people who are at all politically relevant in the money race from the old high of a mere 120,000 people to an even smaller pool of 40,000, or about the number of people in the U.S. named Sheldon.

The Court’s majority opinion is an activist one in the classic sense, yet is oddly disingenuous about its impact on established law. The majority is also not above boot-strapping: yesterday’s decision relies on the secret flow of campaign funds created by Citizens United as a basis for taking down yet more limits, without acknowledging the situation was actually created by the Court.

And in a hypocritical break with oft-hyped principles of constitutional textualism, the Court ignored a key brief filed by Lessig that analyzed the Framer’s uses of the term “corruption,” instead delivering a decision out-of-step with the historical record. Indeed, the case is a harbinger of bad decisions to come because it signals that a key idea — that political money can create an “appearance of corruption” — has evaporated as a matter of law.

Even the dissenters appeared surprised that the Court’s official definition of political corruption now contains only outright bribery. (In fact, the erosion began when then-Solicitor General Elana Kagan threw a key case on appearance of corruption under the bus during the oral argument for Citizens United. Now the damage from abandoning a broader description for political corruption is plain.)

Still, cramped legal arguments aside, the level of cluelessness from the conservative majority about how Washington already more-or-less operates is breathtaking. What we all know in our hearts to be true is actually the case, and not just on House of Cards. To state the painfully obvious: I’ve been in a room in the Congress with a handful of big-money political donors, and seen with my own eyes how their influence is greater than that of 1000 mere voters, even when the money is merely in the background, and not on the table. These are the folks that Roberts thinks need protecting because they are despised — you know, like flag-burners and Nazis.

What he fails to acknowledge is that they are at the heart of the system, not its outskirts. The rich get different meetings, including sometimes in the Oval Office or with committee chairs, and with actual elected officials instead of staff flunkies. They get their phone calls returned, promptly. Meanwhile the rest of us, even those lucky Washingtonians who are officially designated advocates working on issues that a member of Congress or two is supposedly interested in, twiddle our thumbs, waiting around nervously for a return call like a shy schoolgirl from the 1950s.

As a 2012 brilliant TAL episode on the Washington shake-down pointed out, the open secret in Washington is that elected officials need donors more than donors (except, perhaps, the most craven ones) need them. The parties impose fundraising quotas on everyone, including specific levels of money to be raised by new members, committee chairs, and for leadership positions, and every lawmaker also must raise their own dough or look like a sitting duck. The post-Citizens United explosion in Super-PAC spending made this considerably worse — making every candidate more insecure because any one of them could face unknown amounts of last-minute spending by shadowy front groups.

Lifting the aggregate limits, as the Court just did in McCutcheon, may be even more damaging than the inevitable move to eliminate the remaining limits on direct contributions to candidates. Why? Because it substantially raises the potential value of very wealthy donors for larger groups of party electeds. The value of a donor, in the mind of every politician, is their ability to give early and often to the enterprise. Being able to turn-key a political gift to another pol through a joint fund-raising committee or other means is almost as good — and in some cases, might be even better — than collecting it for yourself, because it creates a new ally and obligation while supporting the party. Back-scratching, log-rolling, call it what you will — that’s the actual coin of the realm.

These factors also explain the inherent limits in the power of small donors under the current set of operating rules. And while the growth in smaller donors has been significant in Presidential elections, smaller gifts are harder to collect in less-publicized races. Even the recent efforts to organize smaller donations would have been unlikely to take root without many of the very reforms being struck down by the Court, reforms that, for a brief time, required political parties to look elsewhere besides to the rich and powerful for funds.

The major push for collecting political money emanates from and around Washington, not from individuals clamoring in the marketplace of ideas to be heard, as Roberts and his ilk conjure up in the opinion. When I was, briefly, a legislative director for an organization with a small PAC, I suddenly started getting voicemails from elected officials on my personal cell phone. “Hi, I’m Representative So-and-so,” they would say. “I would really love to talk with you about coming to my event next week.” After a decade of working around Washington advocating on important issues of public health, it was gratifying that actual members of Congress were now so keenly interested in my “political speech”!

I actually don’t fault politicians: it’s currently impossible to know who is really in Congress for the right reasons, because this is how we define their job. But the notion that this kind of routine exchange between two functionaries — sickening, undignified, and clearly self-interested in the narrowest sense — is about anybody’s First Amendment freedom is ludicrous. It’s a classic shake-down, often loathed by both sides, and legalized by an elaborate tap-dance that keeps everyone, barely, on the right side of what otherwise might look a lot like bribery.

Thankfully, in our own dear country (unlike in many places around the world) there is no shortage of political speech, either through money or the more traditional act of actually speaking. If anything, we talk our problems to death, until the solutions expire of boredom and inaction. Instead, the problem with the ineffectiveness of our politics has been, to mangle George Orwell, that some folks’ speech is more equal than others’.

Those who oppose change are often the ones who have the most to gain from stasis. So it makes sense that amassed wealth is inherently anti-reform, both because money represents a victory under the current rules of the game, and because the wealthy have the most — quite literally — to lose. When lawmakers’ livelihoods are roped inextricably to the continued success of the wealthy donors they must court to stay in office and keep their standing in Congress, there is little doubt that democracy has been replaced with something else, and that real change, no matter how justified, will be far harder to achieve.

It’s hard to see why a democracy captured by a few billionaires would care about the callousness of auto companies that fail to repair a defect that would have cost 90 cents per vehicle to fix and cost at least 13 people their lives, as in the recent case of the Chevy Cobalt. Or begin to address the pending catastrophe of climate change, or enact meaningful chemical reform, or do a thousand other difficult things that need to be done but impose real costs on the current economic winners in our system as it is.

Already in America, rich folks live more than a decade longer than the poor. While Roberts is waxing poetic about the First Amendment needing to pad further protections around the wealthiest .0004 percent (or 1300 out of 314 million), we must be building a movement for real and lasting change.

Although I’d been a skeptic on this strategy prior to this moment, I’m now hoping that the Court’s latest boneheaded decision will be enough to jump-start a social movement for a Constitutional Amendment clarifying that corporations really are not people and that the First Amendment doesn’t mean “freedom of money” when it clearly just says “freedom of speech.”

Without these eminently reasonable clarifications, we’ll have a Constitution and a Congress that only work for corporations and the very, very rich. While it’s a long haul to get an Amendment passed, where the Court is headed is clear. We can start to fight today, or lose our country as we know it someday soon.

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Who’s a Moocher, Really?

Mitt Romney, former governor of Massachusetts,...

Mooch much?

Romney’s revealing slip at a private fundraiser has already occasioned a lot of commentary, including a piece by David Brooks bemoaning his campaign’s “incompetence.”

Brooks straightforwardly addresses some of Romney’s errant notions. First, the idea that those who get government money mainly vote for Democrats is false of course, as progressives often bemoan: instead, many are veterans and working class whites who tend to vote Republican. And he points out that these alleged “moochers” also includes millions of retirees. Gosh, vets, old people and poor people – why are you guys always on the take?

Brooks generously says that this is not the real Romney, but a gussied-up campaign version of a Romney-bot. But it seems to me that Romney’s comments instead reveal how uncritically he’s consumed the GOP’s “job creator” Kool-Aid.

One undercurrent of his comments is that unlike the “moocher” class, he and any other people rich enough to attend a big-money Republican fundraiser earned their extraordinary wealth, with bootstraps or otherwise. Of course, Romney perpetually appears not to notice that he was born on third base, which is one of the reasons he keeps committing the same gaffe over and over and over again, like hari kari inflicted with a sharpened silver spoon.

But even beyond his lamentable personal arrogance, the suggestion that he deserves what he has is worth examining. As a governor’s son, handed any opportunity in the world, Romney chose the easiest and most lucrative, but heartless, way to make lots of moola: private equity. This says something at least about his character, in a way that makes Brooks’ assessment look overly generous.

What is private equity, anyway, and is it something of real value, such that someone like Romney is morally better than a moocher? The basic model for private equity firms is to buy a company, in order to “fix” and sell it. The catch? “Fixing” it generally means you have to do one or both of two things: increase revenues or cut costs. To increase revenues is hard, requiring great management and long-term investment. So private equity firms cut costs – providing a short-term answer for investors wanting high, fast returns.

The upshot is that most private equity deals take advantage of tax writeoffs for corporate debt, leveraging a company and risking its health to improve profits for the equity firm. The focus on quick returns almost guarantees this approach. Does this add value? Perhaps sometimes, but more times than not it mainly pads the pockets of investors.

Does it generate “efficiencies”? Who can say, really? Efficiencies for whom and for what purpose? The received wisdom is that anything that makes someone a dollar expresses value, but in societal or moral terms that’s often far from the truth.

As Mother Jones has since revealed, the video in question was filmed at a $50,000-per-plate fundraiser at private equity manager Rick Leder’s house. Here’s what the New York Times had to say about Leder and his financial value-added:

Mr. Leder personifies the debates now swirling around this lucrative corner of finance. To his critics, he represents everything that’s wrong with this setup. In recent years, a large number of the companies that Sun Capital has acquired have run into serious trouble, eliminated jobs or both. Since 2008, some 25 of its companies—roughly one of every five it owns—have filed for bankruptcy. Among the losers was Friendly’s, the restaurant chain known for its Jim Dandy sundaes and Fribble shakes. (Sun Capital was accused by a federal agency of pushing Friendly’s into bankruptcy last year to avoid paying pensions to the chain’s employees; Sun disputes that contention.) Another company that sank into bankruptcy was Real Mex, owner of the Chevy’s restaurant chain. In that case, Mr. Leder lost money for his investors not once, but twice.

And Leder evidently also throws racy parties that require a lot of chlorine for the pool (yawn). So there’s that.

But even setting aside for a moment, if we can, this seedy world of hilariously cliched corporate raiders, why should we treat Republican’s moral assumption that corporate earnings are real, earned, and genuine as sacrosanct?

Obama got in some hot water a little earlier in the summer and was much-derided at the Republican convention for an honest and unremarkable statement about how the money earned by businesses depends on social investments by the government — i.e., all of us — for success. Really, this is fact, and not particularly controversial.

As Obama would know, it’s black letter law that companies may be sued wherever they do business because they “avail” themselves of roads, bridges, and the mail. In addition to the obvious examples Obama was describing, every time an uninsured low-income worker gets sick, and goes to a hospital for charity care, we all subsidize their care (an issue that “Obamacare” will help address by giving that person real insurance at last).

Every time the federal government makes college more affordable for students, or helps low-income families through Healthy Start, the workers of tomorrow become better equipped for a challenging future. Every family that gets a (ridiculously paltry) childcare tax credit is a family that can better afford to work. And every time a government safety or health rule saves a worker from being injured, that person can go to work tomorrow.

But it’s deeper than that as well. Guess who uses our court system, mostly? Businesses, suing other businesses. Without the power to enforce contracts, these arrangements would be enforced at the end of a gun, as in many less tenable economies around the world. A transparent, accountable marketplace is the sine qua non for a productive and stable economy.

And on the other side of the equation, it’s clear that corporations are good at producing stuff, and that a vibrant business economy is good for workers and companies. But there’s also a lot that’s wrong with the way corporate incentives are currently structured. This should be a much bigger part of the debate about the contributions of the so-called “job creators.”

Due to our shareholder incentive structure and a lack of meaningful rules for corporate charters, a corporation’s current job is to squeeze a dollar until it hurts (somebody else). This drive towards the bottom line often produces great suffering for workers, especially low-income workers in punishing, poorly regulated jobs like those in slaughterhouses or on farms.

There’s widespread financial predation as well – the Department of Justice and Attorneys’ General landmark settlement against the banks earlier this summer, though enormous, was the tip of the iceberg compared to the devastation in the housing market from no-document loans, robo-signing and other schemes, and from a derivatives economy that was – and is still – structured to produce careless profit-taking by Wall Street.

And of course there’s environmental harm – the “externalities” that businesses wish we would just clean up instead of them. And sometimes they dirty it up on purpose. In the case of chemical flame retardants, for example, the industry basically invented a need and poisoned every living room and public space in America with cancer-causing toxins, just to sell more pounds of their stuff.

Then there’s the corporate capture of lawmakers through campaign contributions, which puts decisions by government in hoc to the wealthy. The big dollars flow to the committee chairs who preside over issues of interest to companies: most of the same Republicans who mouth off against big government apparently see no problem when these companies attempt to purchase that government for a price.

My point isn’t that corporations are evil. They are structured to be profit-maximizing. But the equation of that with the high moral ground is puzzling, given the dubious mix of activities in which companies often engage. And what often gets lost in the debate about government funding versus corporate freedom is the hypocrisy: corporations readily exploit government money, lands and resources whenever they can, while criticizing any attempt to balance their often-rapacious activities with the common good.

Yet corporations, more than almost anything actually, are mere creatures of the state and governing law. The tax incentives that reward debt and leverage, and the policies that are keeping borrowed money cheap basically forever? Those are government policies, of course. The outrageous, anti-American and anti-middle class policy that capital gains are taxed lower than income? Government again. A system of tax loopholes so porous that the top 10 most profitable U.S. companies paid an average federal tax rate of just 9 percent last year? We built that too.

I don’t really expect that most businesses will have much of a social conscience, because we (unfortunately) haven’t asked them to, by and large. And most people are just doing what it takes to get by, within the rules they were handed. But if you want to claim a kind of moral superiority, well, then forgive me for asking a few questions about how you came by that dollar. If you did it on the backs of workers, through fraud and predation, or by poisoning people or the planet, um, not so much.

And if you chose the private equity route – leveraging companies, gutting assets like workers’ pension funds, and often driving them out of business and pocketing the barely taxed proceeds, then I’m sorry, smug and superior are off the table for you. In fact, you have some explaining to do.

The posturing about the specialness of corporate-earned wealth comes from politicians’ clubby intimacy with the uber-class of the one-percenters – political donors, Wall Street barons, and ultra-rich. And Romney’s comments make clear not just his “incompetence,” but the narrowness of his version of who is righteous in America, and who is not.

In contrast, old-timey conservatives used to routinely acknowledge a role for even strong government in creating the rules and social conditions for businesses to thrive. But this new-fangled GOP doesn’t want to talk about grounding a strong economy in transparency and accountability — they seem only to know a particularly mean-spirited version of us versus them. As Clinton pointed out, this inability to compromise or see the whole picture makes for broken politics and political decision-making.

So we have to fix it. We should use this moment to call into question the thoughtless sanctimony of the discourse around the value of the corporation. We created these things, and if they really are “people,” then the least we can do is require them to act like decent citizens.

Show me a business that cleans up after itself, treats its workers fairly, gives back to the community, is transparent and accountable in its dealings, and creates a well-made, environmentally sound product, and I’ll happily nominate its owners for the moral high ground. Or for political office, because we need more folks with backbone in those jobs.

If that’s not you, though, please step down off that soapbox — …slowly…slowly... — and do try to keep a lid on it about how much mooching the rest of us really do.