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BUSINESS
The shady credit agencies that run your life
Alternet:
[…] The Minneapolis-based Fair Issac Corporation, popularly known as FICO, keeps close tabs on your credit files and uses a secret formula to reduce that information to a number that can powerfully impact your life. If you pay a bill late, they know about it. When you use your credit card, they see it. They even know if you are making inquiries to learn about your credit score.
There’s also a lot they don’t know. Some things, like your race or marital status, are prohibited by law from being considered in credit scoring. Other things, like your employment history, where you live, or how much you’ve saved, don’t fit into the algorithms FICO uses. Any normal person might suspect they are relevant to assessing the quality of your credit, but they won’t make a difference in your score. […]
How did this happen and what can we do about it?
A Bit of History
Credit reporting in the U.S. kicked off in the 19th century when retail merchants and other interested parties created loosely organized local exchanges of information. In a big, young and mobile country, lenders understandably wanted to know something about the people doing the borrowing. Given the cultural norms and the lack of reliable data around, creditworthiness was closely connected to popular notions of “character,” like honesty and thriftiness. This emphasis led local retailers to collect intimate details about peoples’ health, drinking habits and sexual behavior from newspapers and gossip. Being Jewish could also earn you a bad credit rating, or being Chinese, or Catholic, or unmarried, all of which were associated with questionable “character.”
As communication technology developed in the 20th century, the loose-knit organizations evolved into credit bureaus that went national – they were actually among the first businesses in the U.S. to do so. They got quite savvy and efficient about zipping information about consumers from coast to coast. FICO was founded in 1956. Two years later it began selling its credit scoring system. It was the first company to develop algorithms for generating credit scores and got paid royalties for their use.
As these systems grew and became more deeply embedded in the nation’s financial system, they increasingly impacted the the lives and opportunities of citizens. The work of advocacy groups defending consumer rights led to new laws that tried to address fairness and accuracy in credit scoring. In 1971, the Fair Credit Reporting Act (FCRA) gave consumers, among other things, the right to view and dispute reports. The laws continue to be tweaked in an effort to keep up with a rapidly expanding and increasingly influential business. In 2003, an amendment was passed giving consumers the right to view one free credit report a year.
The Federal Reserve inherited consumer rule writing in the 1960s, and for a long time, officials at the Fed took their role seriously and had competent staff. Paul Volcker, Fed chairman from 1979 to 1987, was widely regarded as reasonably tough on consumer affairs and maintained a decent apparatus to regulate industry players and investigate abuses.
Then along came Alan Greenspan. Greenspan’s fanciful free-market economic theories and world view rendered him completely uninterested in consumer affairs matters. Consumer affairs work at the Fed declined sharply in quality and strength. In the past, the Fed had promoted fairness and accuracy in credit scoring as a shield for banks that might face discrimination charges. But in the 1980s and 1990s, bankers turned the shield into a sword. They began holding the scores over consumers’ heads.
Pressures from Wall Street convinced banks to chase consumer fee income, and they began to use credit scores as a device for justifying higher fees. Ever wonder how bank CEO pay started skyrocketing? Socking consumers with above-average interest rates and collecting fees on late payments and other penalties is a big chunk of bank earnings today. If consumers balked or missed a payment, they would be threatened with lowered credit scores. Consumers became hostages.
Today, FICO sells its assessment of your creditworthiness to credit rating bureaus – the three giants are Equifax, Experian and TransUnion, and their reports influence everything from credit cards to mortgages to job offers. A bad score will cost you dearly. For example, a borrower with a bad credit score could end up paying more than $5,000 in extra interest on a $20,000, five-year car loan. Most banks use the scores to set finance charges; the lower the score, the higher the interest rate on a new loan.
Millions of Americans have seen their credit scores plummet since the financial crash. Meanwhile, the credit-scoring business is rife with problems and abuses, ranging from processes that favor speed over accuracy to preferential treatment for the rich and powerful. Unless you are wealthy, you will likely have to borrow money at some point in your life, whether to buy a house or attend college. Here are a few things you need to know about these all-powerful scores that dominate our lives.
Fast, Cheap and Out of Control
Businesses and banks rely on consumer credit bureaus as authoritative sources of accurate information and analysis. But are their calculations up to snuff? Not really, alas. […]
But the new statistical models could best be described by the title of an Errol Morris documentary: “Fast, Cheap, and Out of Control.” The beauty of credit scores for the financial industry is that they’re inexpensive to produce. Profit incentives have led to a sort of cut-and-run, brute force data mining in which the possibility of errors is enormous. Political economist Thomas Ferguson, who uses large data sets to do analysis of voting patterns, political money and stock market phenomena, scoffs at the crudity of systems used in credit scoring. “The results probably would not pass muster in any serious academic journal,” he says. “You almost certainly couldn’t publish the results.”
One problem with credit scoring is related to the so-called “lantern problem” common to scientific inquiries, illustrated in the stock image of a person looking for lost keys where the light is shining rather than where the keys are actually lost. In the case of evaluating credit risk, the statistician will use whatever data is around to plug into the algorithms, rather than ferreting out information that would best determine actual credit worthiness. She may be able to get a certain type of history this way—drawn from your checks, purchases and other typical activity. But she can’t get at the atypical parts, such as whether or not you are out of work, about to come into an inheritance, or have co-signed a note so your children could get a mortgage.
Because credit scoring and reporting firms sell their products to banks, and banks like to assign high interest rates, guess what kind of information about you they don’t like to put in their reports? Positive information. Negative information, like missing a payment on your phone bill, is welcome. Positive information, like your steadily increasingly salary or the fact that you paid down a credit card, is not.
Credit scoring has some predictive accuracy, but not nearly enough to justify its influence. In old-fashioned risk evaluation, a loan officer at a bank would sit down with an individual and study the typical and atypical factors that make up a person’s credit history. Then he or she would make a judgement about credit worthiness that incorporated what wasn’t in the statistical models, as well as what was. Obviously, you can’t rapidly and cheaply assess credit risk on tens of millions of people using personal interviews. And so now we have a fast, cheap, effectively hit-or-miss system that can prevent you from renting an apartment or getting a job. The motivation of the industry is now less about actually finding out if you’re credit worthy, and more about finding out how lenders can make profits off you.
[…]
Around 90 percent of banks use FICO scores, along with the 25 largest credit card issuers. Talk about industry dominance!
When an industry becomes an oligopoly, several things that are bad for consumers tend to happen. Product innovation becomes limited. Players can collude to raise prices, even as the cost of doing credit scoring and reporting goes down. Up until very recently, you could not get a credit report or score without paying for it, a major reason for the 2003 law requiring that consumers be allowed to view one free report per year.
[…]
Credit reporting agencies have a legal obligation to address errors, but the Federal Trade Commission (FTC) is lax in enforcing the rules. The perfunctory, mechanized system currently used by the industry to deal with error complaints is a travesty. (For more on this, see the 2009 report by the National Consumer Law Center, “Automated Injustice.”) Credit bureaus don’t have much incentive to carry out thorough investigations, and the burden of proof is placed squarely on the consumer. The consumer, after all, is not the primary paying customer, so why should the credit reporting agency spend its dollars and time resolving her disputes?
If you get screwed by this system, you can take your complaint to court. But that can be a slow, costly and frustrating experience. An entire sub-industry, the credit repair business, has arisen to address this consumer nightmare – and to profit from it. The credit repair industry has a symbiotic relationship with the reporting and scoring industry. Companies charge stiff fees, maybe $250 up front plus monthly maintenance, for promising to do things you should, in theory, be able to accomplish yourself, like writing dispute letters. Why do they have better luck? Maybe because they get the V.I.P. treatment. And they aren’t the only ones.
Preferential Treatment for the 1 Percent
The major credit ratings bureaus are known to have a two-tiered system for addressing errors. If you’re rich and powerful, you get special treatment. In May 2011, a report by the New York Times revealed that Equifax, Experian and TransUnion keep a V.I.P. list of celebrities, politicians, judges and other muckety-mucks who will get rapid response to error claims. And for the other 99 percent? Expect to have your complaint funneled into an automated system and farmed out to overseas contractors where a worker will spend an average of two minutes figuring out the problem.
Perhaps this explains why members of Congress are so uninterested in credit scoring issues. They don’t have to worry about them. Time to Occupy the credit bureaus?
Who’s Looking at You?
Credit reports are a goldmine of information on consumers. Landlords, insurance companies, employers and potential employers, child support enforcement agencies, and others can now gain access to your report. According to the New York Times, 40 percent of employers now do credit checks on their employees. This creates a vicious cycle whereby a person may get into financial difficulties, say, from an illness, and then find that getting or maintaining a job is impossible due to a low credit score. Which leads to foreclosures. And broken families. And untold human misery.
Who else gets gets to see your scores? Marketers, for one. Generating and selling lists for use in “pre-approved” credit and insurance offers is allowed by law. TransUnion, Experian and Equifax all engage in selling lists of consumers who meet certain criteria in order to receive an offer of credit or insurance. This is the source of the many pre-approved credit offers that clog your mailbox. In order to opt out you must remove your name from any marketing list compiled by a credit rating bureau, whether the list is for pre-approved credit offers or direct marketing. (Call 888-5-OPTOUT or 888-567-8688, or go online to www.optoutprescreen.com.)
Right from the earliest days of the industry, control of information on consumer credit was a problem. When you want to borrow, you do expect to give up some privacy in return for the privilege. But with high-speed, error-prone, profit-driven transfers of information, plus toothless national laws, the chance of your information ending up in the wrong hands is too high for comfort.
Criminals interested in identity theft are delighted by the easy availability of confidential financial information, coupled with sloppy practices by creditors and credit bureaus, which routinely lose data. This makes it a cakewalk for crooks to do things like open accounts in your name. The credit scoring and reporting agencies will now sell you products and services that are supposed to protect you from identity theft — which is ironic, considering that their activities make much of this identity theft possible in the first place!
Then there are potential national security issues. What if a foreign company, say, a Chinese company, decided to buy up an American credit reporting bureau? Or maybe a Mexican drug cartel? What use would they make of that information? Let’s hope we don’t find out.
A People’s Revolution?
The system of credit scoring and reporting is clearly in dire need of reform. But how are we ever going to get it?
The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2010, ensures that you are now entitled to a free copy of your credit score if you are denied a loan based on that score, and also if you get a high interest rate on a new loan. This is a positive development. But what is the mantra of nearly every Republican candidate for president? Repeal Dodd-Frank! Meanwhile the Obama administration is less than eager to push on consumer rights — which is why Elizabeth Warren is running for Senate in Massachusetts, instead of heading up the new Consumer Financial Protection Bureau. […]
What’s left then? A people’s revolution may be the only thing that will truly get the ball rolling. The Occupy Wall Street movement has shined a light on the problem of money and politics, which is crucial to address if there is to be any hope of getting our elected officials to act in our interest. Robust reforms like a constitutional amendment regulating money in elections have been floated, and should remain front-and-center in the national dialogue.
Or how about a credit-reporting agency of the people, for the people and by the people? Similar to the Move Your Money campaign, a Move Your Credit Score campaign might be an experiment worth running, if only to keep the topic in the minds of the public. The idea is that we would all volunteer to submit our information to our own agency, which would agree to sell its scoring to banks and other lenders at a lower fee that those currently charged by credit ratings bureaus. The banks would certainly try to squash it, but a national campaign would be a good way to expose the mess and gain the attention of the mainstream press, which has so far largely confined its reporting to “How to Improve Your Credit Score” pieces.
Taking back the control of our financial destinies is something the 99 percent can certainly rally around. Left, right and center, this is an issue none of us can escape.
ECONOMY
GOP Supercommittee Member Admits Bush Tax Cuts Didn’t Create Jobs, Can’t Explain Why
EDUCATION
Gates Foundation Grants ALEC Hefty Sum For ‘Education Reform’
Crooks and Liars:
This is exactly why I’ve always been suspicious of Bill Gates’ “philanthropy.” Yes, I understand that he’s done wonderful things in Africa, but the United States is where we live and there is a very real and lasting battle going on over the future of public education.
While union-busting is certainly one goal of the privatization monsters, profit is the primary goal. Education for profit is lucrative and alluring, especially to people with large sums of money parked and waiting for investment in big-profit items. So when Bill Gates claims to stand for education reform in this country, I place him squarely in the category of those who stand to profit from privatized education.
Now we have this grant from the Gates Foundation to ALEC, of all things. It isn’t a small grant, by any stretch. $376,635 to be paid over a period of 22 months. That’s about $17,000 per month dropping into the coffers of one of the most evil organizations in the country. The grant description reads as follows:
Purpose: to educate and engage its membership on more efficient state budget approaches to drive greater student outcomes, as well as educate them on beneficial ways to recruit, retain, evaluate and compensate effective teaching based upon merit and achievement
Wow, Michelle Rhee must be doing a happy dance right about now. I’ve tried to turn this around and imagine ways that this money could be used to counter the usual right-wing memes about the wonders of privatization, but I just can’t seem to find any way to do that. I can only conclude that Mr. Gates and his fellow trustees fully embrace the notion of killing public education one state at a time.
Lee Fang wrote a tremendous article for The Nation a couple of weeks ago about online education and how profitable it is, at the expense of public education. In it, he describes a talk lobbyist Patricia Levesque gave to philanthropists. Among those listening were representatives from the Bill and Melinda Gates Foundation. Among her suggestions:
Levesque noted that reform efforts had failed because the opposition had time to organize. Next year, Levesque advised, reformers should “spread” the unions thin “by playing offense” with decoy legislation. Levesque said she planned to sponsor a series of statewide reforms, like allowing taxpayer dollars to go to religious schools by overturning the so-called Blaine Amendment, “even if it doesn’t pass…to keep them busy on that front.” She also advised paycheck protection, a unionbusting scheme, as well as a state-provided insurance program to encourage teachers to leave the union and a transparency law to force teachers unions to show additional information to the public. Needling the labor unions with all these bills, Levesque said, allows certain charter bills to fly “under the radar.”
This particular talk was being given in the context of online education and the perceived value of permitting online charter schools, funded with public education dollars. Levesque’s clients?
But Levesque wasn’t delivering her hardball advice to her lobbying clients. She was giving it to a group of education philanthropists at a conference sponsored by notable charities like the Bill and Melinda Gates Foundation and the Michael and Susan Dell Foundation. Indeed, Levesque serves at the helm of two education charities, the Foundation for Excellence in Education, a national organization, and the Foundation for Florida’s Future, a state-specific nonprofit, both of which are chaired by Jeb Bush. A press release from her national group says that it fights to “advance policies that will create a high quality digital learning environment.”
[…] In the state of Florida, this report from August highlights the cozy relationship between Florida’s Governor Rick Scott and the for-profit charter organization Charter Schools USA, after he spoke to a conference of employees:
Speaking to the crowd of about 2,000 Charter Schools USA employees, Scott gave a nod to the charters that are independently operated, but financed with tax dollars. Charter USA manages 25 charters in Florida with about 23,500 students, making its operation larger than 40 of 67 public school systems in the state.
He said charter schools must prove their promise as an escape route for students “stuck in poor performing schools.”
“You have to make sure that you are great,” he said. “If you don’t, you are going to get a lot of criticism.”
Charters were under fire earlier this summer when school grades came out and charters earned nearly half of the 31 F grades handed out statewide, although they represent only a fraction of the state’s more than 3,000 public schools.
Oh, and guess who else was at this rally? That’s right, Michelle Rhee! So here we have a “rally” paid for by a for-profit organization funded solely with public money that might otherwise go directly into the public school systems in Florida, complete with buses to transport employees from their various locations to the lovely Rosen Plaza Hotel. Faced with criticism over the event, here’s what Governor Scott had to say:
The for-profit management firm, which is paid with tax dollars, bused in employees from across the state for the daylong event, including lunch, at the upscale Rosen Plaza. Orange and Seminole school district officials said the expense was misguided when schools across the state face a budget crisis for daily operations.
“Leave it to the local educators to decide how to best spend their money,” Scott said.
Charter schools, including those managed by Charter Schools USA, have complained that they are inadequately funded by the state.
I wonder if Scott would say that about a similar event for public school teachers? Somehow, I doubt it.
This organization and others like it exist because ALEC is busy at work coordinating with legislators on the state level to throw a bunch of union-busting tactics into the fire in order to sneakily pass state authorizations for online charter schools. Thanks to the Bill & Melinda Gates Foundation, they now have nearly $400,000 more to use toward that goal.
With friends like that, who needs enemies?
ENERGY
Obama Announces $4 Billion Plan To Cut Buildings’ Energy Consumption 20 Percent
President Obama and former president Bill Clinton announced a program today to improve building energy efficiency 20 percent by 2020, injecting $4 billion into achieving Clinton’s Better Building Challenge. Since commercial and residential buildings account for 40 percent of national energy use, this move would scale back the country’s energy footprint. Officials estimate the plan would save $40 billion in the long run while creating jobs over the next two years.
HEALTH CARE
Must Read: Health Insurers Now Have To Take Their Medicine
karoli:
Insurers are not happy. Not even a little bit. What they feared most about the Affordable Care Act — more than insuring people with pre-existing conditions, more than leaving children on their parents’ policies until age 26, more than having to lift lifetime caps, more than any of those things — was the limited Medical Loss Ratio (MLR).
The PPACA limits the “padding” between actual claims paid and premium collections to 15% for large groups and 20% for individuals and small groups. Any excess the insurer has must be refunded to insureds by the end of the year for which the MLR is determined. Everyone scoffed at the time over these limits, figuring the regulations would be broad and wide enough for insurers to run through the loopholes.
But no. Final rules were issued last week and insurers didn’t get anything they wanted. Via Rick Ungar at Forbes:
This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time. Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.
Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.
Ungar’s logic at the end is a little bit wrong. The current MLR, just for perspective, is about 40-45%. That means for every dollar paid toward health coverage, only 60 cents or so goes to actual health costs. The rest is considered overhead — agents’ commissions, big CEO salaries, and of course, that shareholder profit that benefits those with the money to actually buy shares in these companies. Medicare, on the other hand, has a very low overhead attached to it — about 7-8%, because it is in the business of providing medical benefits, and not making a profit or paying CEOs handsome salaries.
The only reason for insurers’ efforts to deny benefits was simply to boost up the bottom line, and in many cases, the only reason for big premium hikes was also to boost that bottom line and the profits distributed to shareholders. Now insurers will find themselves in the business of actually paying for medical benefits. The regulations, by the way, do not allow them to include agents’ commissions in their “medical expense” column.
Ungar does, however, ask the right question toward the end of his post:
So, can private health insurance companies manage to make a profit when they actually have to spend premium receipts taking care of their customers’ health needs as promised?
Not a chance-and they know it. Indeed, we are already seeing the parent companies who own these insurance operations fleeing into other types of investments. They know what we should all know – we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it.
Whether you are a believer in the benefits of single-payer health coverage or an opponent, mark this day down on your calendar because this is the day seismic shifts in our health care system finally get under way.
If you thought that the Obama Administration chickened out on pushing the nation in the direction of universal health care for everyone, today is the day you begin to understand that the reality is quite the contrary.
He’s right, particularly about what path this sets the nation on. What Republicans feared most was that insurers would lose their gravy train and jump off before having to actually buckle down and provide health benefits, leading states to adopt single payer plans one by one, until the entire nation had single payer health insurance. This is why Michele Bachmann wails about “Obamacare leading to socialism”, and why they fought so hard against all of it. Because now they will have to not only limit their greed, but they’ll also have to report it publicly for everyone to review. That was also part of the PPACA. Each year insurers will have to publish their full balance sheets showing what they have spent, how they have spent it, and what their actual MLR is.
There is no more effective way to drive the cost of health care down than to take the profit incentive away from insurers. As time goes on, we’ll look back at the excesses of the past with a shiver, while insurers figure out other ways to take your money. They know the train has left the station on this one.
JUSTICE
How the Senate flagrantly voted to supersede due process rights for Americans
The Atlantic:
Is it lawful for the president to order any American held indefinitely as a terrorist, without formal charges, evidence presented in open court, a trial by jury, or a standard of “guilty beyond a reasonable doubt”? The U.S. Senate had a chance Wednesday to assert that no, a president does not possess that power — that the United States Constitution guarantees due process.
Sen. Dianne Feinstein (D-Calif.) urged her colleagues to seize the opportunity. “We as a Congress are being asked, for the first time certainly since I have been in this body, to affirmatively authorize that an American citizen can be picked up and held indefinitely without being charged or tried. That is a very big deal, because in 1971 we passed a law that said you cannot do this. This was after the internment of Japanese-American citizens in World War II,” she said. “What we are talking about here is the right of our government, as specifically authorized in a law by Congress, to say that a citizen of the United States can be arrested and essentially held without trial forever.”
Sen. Dick Durbin (D-Ill.) agreed.
“If we believe an American citizen is guilty or will be guilty of acts of terrorism, can we detain them indefinitely?” he said. “Can we ignore their constitutional rights and hold them indefinitely, without warning them of their right to remain silent, without advising them of their right to counsel, without giving them the basic protections of our Constitution? I don’t believe that should be the standard.”
In the end, however, Feinstein and Durbin lost the debate.
The U.S. Senate refused to affirm that American citizens arrested in the United States shouldn’t be subject to indefinite military detention on the president’s order. Senator Feinstein’s amendment to that effect went down in defeat with 55 historic votes against it.
Here are the senators who lost, the ones who wanted to protect the rights of U.S. citizens to due process:
GOP aide goes on trial in Maryland for suppressing black voters
The Raw Story:
BALTIMORE (Reuters) – A former Republican governor’s aide accused of election fraud in Maryland defended himself in court on Friday against claims an automated phone message he authorized was intended to suppress black Democrat voters.
Paul Schurick, 55, campaign manager for former Maryland governor Robert Ehrlich, testified that the phone calls made to more than 100,000 Democratic, mostly-black voters on election night last year were intended to inspire them to vote.
The message assured listeners that Ehrlich’s Democratic opponent — incumbent Martin O’Malley who had defeated Ehrlich’s reelection bid in 2006 — and President Barack Obama, who was not up for election, were already “successful.”
“Our goals have been met,” said the message delivered in a woman’s voice starting at about 6 p.m. on November 2.
“The polls are correct and we took it back. We’re OK. Relax. Everything’s fine. The only thing left is to watch it on TV tonight.”
Prosecutors say the calls were approved as Ehrlich’s support among black voters plummeted, according to emails between Schurick and a polling expert one week before the election, but by suppressing black voters — who heavily favored O’Malley — Ehrlich could make up significant ground.
Schurick is charged with two counts of conspiracy, one count of election fraud and one count of failing to include a mandatory line indicating which candidate approved the calls.
Schurick admitted that amid a hectic election day and reports of low voter turnout, he authorized the calls. Around 4:40 p.m., Julius Henson, a political consultant hired by the Ehrlich campaign to appeal to African-American voters, read him the script over the phone.
“I accepted it,” said Schurick, who testified for about two hours on Friday. “He’s the expert. As I said to him, ‘I’m paying you $16,000 a month to come up with a strategy.’”
The calls were intended to be “counterintuitive,” Schurick said. Upon hearing that O’Malley had won, black Democratic voters who were sympathetic to Ehrlich would be motivated to vote, he said.
Defense attorneys also called several witnesses, high-ranking members of Maryland’s political institutions, to vouch for Schurick, who has held top positions in both Democratic and Republican administrations for years.
On Thursday, jurors heard testimony from Ehrlich, former Republican National Committee chairman and current MSNBC analyst Michael Steele and former Maryland Governor Marvin Mandel.
Closing arguments and jury deliberation are expected to begin Monday.
MILITARY
Atheist group urges California’s Camp Pendleton to remove Christian cross
Amnesty Int’l Calls on African Countries to Arrest GW Bush for Authorizing Torture…
OCCUPY
Here’s WashPost account of OccupyDC confrontation. Dozen arrested.
POLITICS
David Axelrod Responds To Chris Christie’s ‘Bystander’ Comment On Meet the Press (VIDEO)
Jeffery Sachs: The New Progressive Movement Has Begun
OCCUPY WALL STREET and its allied movements around the country are more than a walk in the park. They are most likely the start of a new era in America. Historians have noted that American politics moves in long swings. We are at the end of the 30-year Reagan era, a period that has culminated in soaring income for the top 1 percent and crushing unemployment or income stagnation for much of the rest. The overarching challenge of the coming years is to restore prosperity and power for the 99 percent.
Thirty years ago, a newly elected Ronald Reagan made a fateful judgment: “Government is not the solution to our problem. Government is the problem.” Taxes for the rich were slashed, as were outlays on public services and investments as a share of national income. Only the military and a few big transfer programs like Social Security, Medicare, Medicaid and veterans’ benefits were exempted from the squeeze.
Reagan’s was a fateful misdiagnosis. He completely overlooked the real issue — the rise of global competition in the information age — and fought a bogeyman, the government. Decades on, America pays the price of that misdiagnosis, with a nation singularly unprepared to face the global economic, energy and environmental challenges of our time.
Washington still channels Reaganomics. The federal budget for nonsecurity discretionary outlays — categories like highways and rail, education, job training, research and development, the judiciary, NASA, environmental protection, energy, the I.R.S. and more — was cut from more than 5 percent of gross domestic product at the end of the 1970s to around half of that today. With the budget caps enacted in the August agreement, domestic discretionary spending would decline to less than 2 percent of G.D.P. by the end of the decade, according to the White House. Government would die by fiscal asphyxiation.
Both parties have joined in crippling the government in response to the demands of their wealthy campaign contributors, who above all else insist on keeping low tax rates on capital gains, top incomes, estates and corporate profits. Corporate taxes as a share of national income are at the lowest levels in recent history. Rich households take home the greatest share of income since the Great Depression. Twice before in American history, powerful corporate interests dominated Washington and brought America to a state of unacceptable inequality, instability and corruption. Both times a social and political movement arose to restore democracy and shared prosperity.
The first age of inequality was the Gilded Age at the end of the 19th century, an era quite like today, when both political parties served the interests of the corporate robber barons. The progressive movement arose after the financial crisis of 1893. In the following decades Theodore Roosevelt and Woodrow Wilson came to power, and the movement pushed through a remarkable era of reform: trust busting, federal income taxation, fair labor standards, the direct election of senators and women’s suffrage.
The second gilded age was the Roaring Twenties. The pro-business administrations of Harding, Coolidge and Hoover once again opened up the floodgates of corruption and financial excess, this time culminating in the Great Depression. And once again the pendulum swung. F.D.R.’s New Deal marked the start of several decades of reduced income inequality, strong trade unions, steep top tax rates and strict financial regulation. After 1981, Reagan began to dismantle each of these core features of the New Deal.
Following our recent financial calamity, a third progressive era is likely to be in the making. This one should aim for three things. The first is a revival of crucial public services, especially education, training, public investment and environmental protection. The second is the end of a climate of impunity that encouraged nearly every Wall Street firm to commit financial fraud. The third is to re-establish the supremacy of people votes over dollar votes in Washington.
None of this will be easy. Vested interests are deeply entrenched, even as Wall Street titans are jailed and their firms pay megafines for fraud. The progressive era took 20 years to correct abuses of the Gilded Age. The New Deal struggled for a decade to overcome the Great Depression, and the expansion of economic justice lasted through the 1960s. The new wave of reform is but a few months old.
The young people in Zuccotti Park and more than 1,000 cities have started America on a path to renewal. The movement, still in its first days, will have to expand in several strategic ways. Activists are needed among shareholders, consumers and students to hold corporations and politicians to account. Shareholders, for example, should pressure companies to get out of politics. Consumers should take their money and purchasing power away from companies that confuse business and political power. The whole range of other actions — shareholder and consumer activism, policy formulation, and running of candidates — will not happen in the park.
The new movement also needs to build a public policy platform. The American people have it absolutely right on the three main points of a new agenda. To put it simply: tax the rich, end the wars and restore honest and effective government for all.
Finally, the new progressive era will need a fresh and gutsy generation of candidates to seek election victories not through wealthy campaign financiers but through free social media. A new generation of politicians will prove that they can win on YouTube, Twitter, Facebook and blog sites, rather than with corporate-financed TV ads. By lowering the cost of political campaigning, the free social media can liberate Washington from the current state of endemic corruption. And the candidates that turn down large campaign checks, political action committees, Super PACs and bundlers will be well positioned to call out their opponents who are on the corporate take.
Those who think that the cold weather will end the protests should think again. A new generation of leaders is just getting started. The new progressive age has begun.
Is Luntz losing his touch, or are conservatives that desperate?
Hullabaloo:
It may be bad form to harp on the same item three posts in a row, but I can’t resist taking a few jabs at Frank Luntz based on his latest talking points for Republicans concerned about Occupy Wall Street and rising inequality. It’s important to talk about this because Luntz’ latest talking points represent a significant danger not to Democrats and progressives so much as to conservatives themselves.
The genius of Luntz has always been his ability to use the emotional power of language to bullshit the public at a slant, while maintaining a connection to reality and avoiding direct, outright lying. The “death tax” is a perfect example of this: it’s an emotionally gripping negative phrase that paints an incomplete but not entirely inaccurate picture of a tax on the estates of wealthy people after they die. “Estate tax” and “inheritance tax” are the most accurate descriptors, but do little to engage emotionally. “Paris Hilton tax” is a good progressive substitute, as it also has resonating emotional associations, while telling a progressive and positive story of the tax in just three words. It’s not the most accurate description perhaps, but neither is death tax.
But the key to making framing work is that any language you substitute has to have 1) a connection to reality; and 2) move the language more strongly in the direction of the story you want to tell in a way that can’t be co-opted by the other side. Most of Luntz’ language on inequality here fails on one or both of these fronts. Let’s peruse some examples:
1. Don’t say ‘capitalism.’
“I’m trying to get that word removed and we’re replacing it with either ‘economic freedom’ or ‘free market,’ ” Luntz said. “The public . . . still prefers capitalism to socialism, but they think capitalism is immoral. And if we’re seen as defenders of quote, Wall Street, end quote, we’ve got a problem.”
The retreat from capitalism is astonishing, if not altogether surprising. The Occupy movement can’t really take credit for this, as the polling on capitalism versus socialism has been been weak for years now since the economic crash. Still, there’s no question that with income inequality having been successfully vaulted to the forefront of the national discourse by the Occupiers, the perception of capitalism as a system has taken a hit. But to retreat from capitalism as an idea isn’t just a big loss for the right wing alone: the problem is that “economic freedom” can mean a lot of things to a lot of different people. Single-payer healthcare and free public education means economic freedom. Forgiveness of student loan debt means economic freedom. George Lakoff wrote a great book Whose Freedom? on the way the Right and Left perceive that all-encompassing word. “Freedom” has always been a weak frame for the Right, because it’s so easily muddled and put in more progressive terms. Shifting from “capitalism” to “freedom” and calling that a positive message development for the Right is like calling a “retreat” an “advance in the opposite direction.” Moving on:
2. Don’t say that the government ‘taxes the rich.’ Instead, tell them that the government ‘takes from the rich.’
“If you talk about raising taxes on the rich,” the public responds favorably, Luntz cautioned. But “if you talk about government taking the money from hardworking Americans, the public says no. Taxing, the public will say yes.”
3. Republicans should forget about winning the battle over the ‘middle class.’ Call them ‘hardworking taxpayers.’
“They cannot win if the fight is on hardworking taxpayers. We can say we defend the ‘middle class’ and the public will say, I’m not sure about that. But defending ‘hardworking taxpayers’ and Republicans have the advantage.”
The problems with this approach for conservatives are numerous. First off, it’s a retreat from the issue of taxes–an acknowledgment that a word they used to spin as entirely evil (“taxes”) no longer carries such a negative punch. Instead, they are recommended to use more violent imagery of theft. The only problem with that is that everyone pays taxes: most people who aren’t libertarian anarcho-capitalists get that taxes aren’t exactly armed robbery. Besides, Robin Hood has always been and continues to be a pretty popular legend. I recently did a series of focus groups on progresssive framing with mostly political moderates, and many respondents in almost all the groups advocated forceful approaches to redistributing the wealth stolen by Wall Street. Many advocated more than just violence against their pocketbooks. So if Luntz is hoping that the rich will get sympathy by using the language of violence, he’s mistaken on two counts.
The other failure here is the sleight-of-hand equation of the super-wealthy with “hardworking taxpayers.” This won’t work, either, in large part due to right-wing message machine itself. “Hardworking Americans” has long been code in Republican and conservative Democratic circles for (mostly blue collar) white America. When we hear the phrase “hard-working American”, most of us are instantly primed to think of a Republican-voting white male construction crew foreman in a hard hat driving a Ford F-150. Those with more progressive leanings will see this phrase more inclusively. But no onesees a fat cat in a $3,000 Armani suit when you say that phrase. Using it to defend investment bankers comes off poorly and won’t really work.
4. Don’t talk about ‘jobs.’ Talk about ‘careers.’
“Everyone in this room talks about ‘jobs,'” Luntz said. “Watch this.”
He then asked everyone to raise their hand if they want a “job.” Few hands went up. Then he asked who wants a “career.” Almost every hand was raised.
“So why are we talking about jobs?”
This one really makes me laugh. It’s perhaps Luntz’ most creative approach, but it’s also the one that best shows off his glass jaw. Again, two big problems here for Republicans. First, almost no one actually believes that politicians on either side of the aisle will help them find a stable career; insofar as they do, careers come from a personal and public investment in education, which is squarely in the Dem/progressive wheelhouse.
But more importantly, it has been the conservative and neoliberal approach for many years now to move workers away from stable decades-long jobs, and into movable jobs in which they switch careers and locations several times in their life. Remember thatfreedom is supposed to be part of the economic conservative appeal: that means in theory that no one owes you a business model (though in practice, of course, conservatives are quite guilty of crony capitalism as even Sarah Palin pointed out), that when technology or global arbitrage kill entire industries, people should pull themselves up by their bootstraps and find a different line of work, and that the free flow of capital is more important than protecting any particular career tracks. Stable careers, dependable jobs in the same field, defined pensions from those careers, all of these things that cater more to human dignity than to flow of capital are part of the progressive worldview, not the conservative one.
People aren’t about to believe that government offers them a career. They certainly don’t believe thatconservative politicians want them to have a stable career. And even if they did believe that, it wouldn’t exactly help the conservative cause in the long run, but would hurt it by diluting and contradicting the conservative economic message.
6. Don’t ever say you’re willing to ‘compromise.’
“If you talk about ‘compromise,’ they’ll say you’re selling out. Your side doesn’t want you to ‘compromise.’ What you use in that to replace it with is ‘cooperation.’ It means the same thing. But cooperation means you stick to your principles but still get the job done. Compromise says that you’re selling out those principles.”
Once again, this is one-step-forward-for-two-steps-back advice from Luntz. Yes, what he is saying is true and is a great set of talking points…for liberal politicians. Polls show that liberals have a much higher respect for the notion of “compromise” than do conservatives, which is why Luntz is making this case.
But Luntz’ problem here is that his alternative is “cooperation.” Again, that’s smack in the middle of the progressive wheelhouse. Conservatives may not like compromise, but everything about the word “cooperation” brings forward imagery and associations that help the Left, not the Right. The Right is predicated on individual self-reliance, which is part of why sticking to one’s principles is most important to them. Think John Wayne. The Left is predicated on collective action and cooperation between rival groups to solve big problems against overwhelming odds. Think Avatar. “Cooperation” also assumes something less than Manichean political divides, which runs directly contrary to the Fox News mindset. Switching from “compromise” to “cooperation” for conservatives is jumping out of the frying pan into a doubly hot fire.
After some fairly boilerplate stuff (say “waste” instead of “government spending,” since Luntz has advocated for years not to attack “government” as an entity but instead attack “Washington”; indicate an understanding of the voters’ concerns; use “job creators” instead of “entrepreneurs,” which is legitimately good advice for them and the most dangerous framing challenge facing the Left at the moment), Luntz again astonishes with #9:
9. Don’t ever ask anyone to ‘sacrifice.’
“There isn’t an American today in November of 2011 who doesn’t think they’ve already sacrificed. If you tell them you want them to ‘sacrifice,’ they’re going to be be pretty angry at you. You talk about how ‘we’re all in this together.’ We either succeed together or we fail together.
For a conservative, this is utterly incompetent. One can understand what Luntz is trying to do here: paint everyone from Wall St. to the middle class as being in the same boat, and asking everyone to take a haircut in the form of entitlement cuts. But again two big problems here: first, the language of collective destiny is decidedly far Left. Second, it’s been fairly obvious to almost everyone for quite some time now that we’re not all succeeding together. A few people are succeeding fabulously, while almost everyone else is getting left in the dust. If we’re really all in this together, then it should be incumbent on those who are doing very well in this economic to make provision for those who are not, and do something to rectify the imbalance. That’s why this imagery is part of the Left’s rhetorical construct in the first place.
This is just terrible, terrible advice for conservatives. I hope they take it.
And finally, the last bits:
10. Always blame Washington.
Tell them, “You shouldn’t be occupying Wall Street, you should be occupying Washington. You should occupy the White House because it’s the policies over the past few years that have created this problem.”
BONUS:
Don’t say ‘bonus!’
Luntz advised that if they give their employees an income boost during the holiday season, they should never refer to it as a “bonus.”
“If you give out a bonus at a time of financial hardship, you’re going to make people angry. It’s ‘pay for performance.'”
Yes, Luntz is again advocating “blaming Washington.” He goes on at length about this in his book Words that Work: Washington is a cold, distant, corrupt and unfeeling place for most voters, and it’s associated with intrusive big government, which paints the Left in a negative light. Fine insofar as that goes. But the problem for Luntz here is that every poll up to this point makes clear that most voters blame the Bush Administration and Wall Street for the economic crisis. Only in the fetid fever swamps of the Fox News demographic are Barney Frank and Chris Dodd to blame. Now, many progressives see catering to Wall Street’s interests as a bipartisan affair. But telling angry voters to “Occupy the White House” instead of Wall Street is going to fall on deaf ears. Even if they are inclined to believe that the current occupant of the White House isn’t doing much to solve the problem, the only people who believe the current occupant is the causeof the problems are people already firmed entrenched in the conservative camp.
And as far as “pay for performance” goes instead of “bonuses,” that’s so far from reality that most voters will simply laugh. There’s scarcely a voter alive who doesn’t know stories of executives being grossly overcompensated even as they run their companies into the ground. In theory this is good framing for Republicans; in practice it’s so divorced from reality that it will just come off as tone-deaf.
One could argue here that Luntz is losing his magic touch here. But one could also say that conservatives are in enough of a message bind right now that this is all Luntz has to work with on the subjects of Wall St. and inequality. I tend to lean toward to the latter view.
This is a big glass jaw for the conservative movement, one they can only protect by attempting to steer the conversation to something, anything else. Dems and progressives need not to get distracted. They need to punch and punch hard.
Quantifying the Blowhard Factor, Newt Gingrich Edition
Kevin Drum:
Anyway, here he is today with a lexicographic tour of the mind of Newt Gingrich:
By now, we’ve all become familiar with Newt Gingrich’s habit of using a few choice adverbs to make the things he says sound just a bit more intelligent to his listeners. Profoundly. Deeply. Frankly. But none of them are as vital to the Gingrich lexicon as fundamentally (along with its cousin, the adjectivefundamental).
….To give you a more complete understanding of how compulsively Gingrich abuses his favorite words, I searched Nexis transcripts and news accounts with the goal of plucking out every single phrase in which he uttered them. I started in the present day, and made it all the way to the beginning of 2007 before I had to stop, for my own health and sanity, which, according to my editors, was beginning to suffer in noticeable ways….Scroll onward, if you dare, to behold all loosely alphabetized 418 entries.
“fundamentally a falsehood”
“fundamentally a lie”
“fundamentally a violation of international law”
“fundamentally about reassessing our entire strategy in the region”
[410 more….]
“fundamentally wrong with it”
“fundamentally wrong with the current system”
“fundamentally wrong with the system”
“fundamentally wrong with weakness in America”
Now that’s what Lexis was invented for and what blogging is all about: to quantify just how big a blowhard Newt Gingrich is. Kudos.
A great way to look at the Newt vs Mitt dynamic from Charles Krauthammer.
It’s Iowa minus 32 days, and barring yet another resurrection (or event of similar improbability), it’s Mitt Romney vs. Newt Gingrich. In a match race, here’s the scorecard:
Romney has managed to weather the debates unscathed. However, the brittleness he showed when confronted with the kind of informed follow-up questions that Bret Baier tossed his way Tuesday on Fox’s “Special Report” — the kind of scrutiny one doesn’t get in multiplayer debates — suggests that Romney may become increasingly vulnerable as the field narrows.
Moreover, Romney has profited from the temporary rise and spontaneous combustion of Michele Bachmann, Rick Perry and Herman Cain. No exertion required on Romney’s part.
Enter Gingrich, the current vessel for anti-Romney forces — and likely the final one. Gingrich’s obvious weakness is a history of flip-flops, zigzags and mind changes even more extensive than Romney’s — on climate change, the health-care mandate, cap-and-trade, Libya, the Ryan Medicare plan, etc.
The list is long. But what distinguishes Gingrich from Romney — and mitigates these heresies in the eyes of conservatives — is that he authored a historic conservative triumph: the 1994 Republican takeover of the House after 40 years of Democratic control.
Which means that Gingrich’s apostasies are seen as deviations from his conservative core — while Romney’s flip-flops are seen as deviations from . . . nothing. Romney has no signature achievement, legislation or manifesto that identifies him as a core conservative.
So what is he? A center-right, classic Northeastern Republican who, over time, has adopted a specific, quite bold, thoroughlyconservative platform. His entitlement reform, for example, is more courageous than that of any candidate, including Barack Obama. Nevertheless, the party base, ostentatiously pursuing serial suitors-of-the-month, considers him ideologically unreliable. Hence the current ardor for Gingrich.
Gingrich has his own vulnerabilities. The first is often overlooked because it is characterological rather than ideological: his own unreliability. Gingrich has a self-regard so immense that it rivals Obama’s — but, unlike Obama’s, is untamed by self-discipline.
Take that ad Gingrich did with Nancy Pelosi on global warming, advocating urgent government action. He laughs it off today with “that is probably the dumbest single thing I’ve done in recent years. It is inexplicable.”
This will not do. He was obviously thinking something. What was it? Thinking of himself as a grand world-historical figure, attuned to the latest intellectual trend (preferably one with a tinge of futurism and science, like global warming), demonstrating his own incomparable depth and farsightedness. Made even more profound and fundamental — his favorite adjectives — if done in collaboration with a Nancy Pelosi, Patrick Kennedy or even Al Sharpton, offering yet more evidence of transcendent, trans-partisan uniqueness.
Two ideologically problematic finalists: One is a man of center-right temperament who has of late adopted a conservative agenda. The other is a man more conservative by nature but possessed of an unbounded need for grand display that has already led him to unconservative places even he is at a loss to explain, and that as president would leave him in constant search of the out-of-box experience — the confoundedly brilliant Nixon-to-China flipperoo regarding his fancy of the day, be it health care, taxes, energy, foreign policy, whatever.
The second, more obvious, Gingrich vulnerability is electability. Given his considerable service to the movement, many conservatives seem quite prepared to overlook his baggage, ideological and otherwise. This is understandable. But the independents and disaffected Democrats upon whom the general election will hinge will not be so forgiving.
They will find it harder to overlook the fact that the man who denounces Freddie Mac to the point of suggesting that those in Congress who aided and abetted it be imprisoned, took $30,000 a month from that very same parasitic federal creation. Nor will independents be so willing to believe that more than $1.5 million was paid for Gingrich’s advice as “a historian” rather than for services as an influence peddler.
Obama’s approval rating among independents is a catastrophically low 30 percent. This is a constituency disappointed in Obama but also deeply offended by the corrupt culture of the Washington insider — a distaste in no way attenuated by fond memories of the 1994 Contract with America
My own view is that Republicans would have been better served by the candidacies of Mitch Daniels, Paul Ryan or Chris Christie. Unfortunately, none is running. You play the hand you’re dealt. This is a weak Republican field with two significantly flawed front-runners contesting an immensely important election. If Obama wins, he will take the country to a place from which it will not be able to return (which is precisely his own objective for a second term).
Every conservative has thus to ask himself two questions: Who is more likely to prevent that second term? And who, if elected, is less likely to unpleasantly surprise?
MAUREEN DOWD:
NEWT GINGRICH’S mind is in love with itself.
It has persuaded itself that it is brilliant when it is merely promiscuous. This is not a serious mind. Gingrich is not, to put it mildly, a systematic thinker.
His mind is a jumble, an amateurish mess lacking impulse control. He plays air guitar with ideas, producing air ideas. He ejaculates concepts, notions and theories that are as inconsistent as his behavior.
He didn’t get whiplash being a serial adulterer while impeaching another serial adulterer, a lobbyist for Freddie Mac while attacking Freddie Mac, a self-professed fiscal conservative with a whopping Tiffany’s credit line, and an anti-Communist Army brat who supported the Vietnam War but dodged it.
“Part of the question I had to ask myself,” he said in a 1985 Wall Street Journal piece about war wimps, “was what difference I would have made.”
Newt swims easily in a sea of duality and byzantine ideas that don’t add up. As The Washington Post reported on Friday, an America under President Gingrich would have two Social Security systems — “one old, one new, running side by side” — two tax systems and two versions of Medicare.
Consider his confusion of views on colonialism. In the 1971 Ph.D. dissertation he wrote at Tulane University, titled “Belgian Education Policy in the Congo 1945-1960,” he is anti-anticolonialism.
“If the Congolese are to confront the future with realism they will need a solid understanding of their own past and an awareness of the good as well as the bad aspects of colonialism,” he argued. “It would be just as misleading to speak in generalities of ‘white exploitation’ as it once was to talk about ‘native backwardness.’ ”
He warned against political pressures encouraging “Black xenophobia.” What’s xenophobic about Africans wanting their oppressors to go away? It’s like saying abused wives who want their husbands to leave are anti-men.
He sees colonialism as a complicated thing with good and bad effects rather than a terrible thing with collateral benefits.
Laura Seay, an assistant professor at Morehouse College in Atlanta and an expert on Africa, blogged that Gingrich’s thesis was “kind of a glorified white man’s burden take on colonial policy that was almost certainly out of vogue in the early 1970s. Gingrich wrote this as the Black Consciousness and Black Power movements were approaching their pinnacles. It was most decidedly not the time to be arguing that white European masters did a swell job ruling black Africans through a system that ensured that most Congolese would never get a real education.”
When it comes to America’s British overlords, Gingrich is not so sympathetic. The bludgeon of American exceptionalism that he uses on President Obama was forged at Valley Forge.
In the introduction to his novel about George Washington and the Revolutionary War, “To Try Men’s Souls,” written with William R. Forstchen, Gingrich writes: “The British elites believed this was a conflict about money and about minor irritations. They simply could not believe the colonists were serious about their rights as free men and women.”
Gingrich, a radical precursor to the modern Tea Party when he staged what conservatives considered the second American Revolution in the House in the ’90s, wrote with delight of London’s shock when Samuel Adams started the original Tea Party.
But while an anticolonial disposition is good if you’re Adams, Washington and Jefferson, it’s bad if you’re Barack Obama’s Kenyan father living under British rule two centuries later.
Gingrich made one of his classic outrageous overreaches last year when he praised a Dinesh D’Souza article in Forbes, saying you could only understand how “fundamentally out of touch” and “outside our comprehension” President Obama is “if you understand Kenyan, anticolonial behavior.”
D’Souza’s absurd ad hominem theory tying Obama to his father goes like this: “This philandering, inebriated African socialist, who raged against the world for denying him the realization of his anticolonial ambitions, is now setting the nation’s agenda through the reincarnation of his dreams in his son.”
This was a typical Newt mental six-car pileup. The man who espouses Christian values being un-Christian in visiting the alleged sins of the father upon the son; the man who reveres the anticolonialism of the founding fathers ranting against the anticolonialism of the father of America’s first African-American president. How do you rail against the Evil Empire and urge overthrowing Saddam and not celebrate liberation in Africa?
Newt is like the Great White Hunter out on campaign safari, trying to bag a Mitt, an animal with ever-changing stripes. Certainly, the 68-year-old’s haughty suggestions on child labor last week in Iowa smacked of harsh paternalism and exploitation.
He expanded on Dickensian remarks he’d made recently at Harvard, where he said “it is tragic what we do in the poorest neighborhoods, entrapping children in child laws which are truly stupid,” adding that 9-year-olds could work as school janitors.
“Really poor children in really poor neighborhoods have no habits of working and have nobody around them who works,” he asserted in an ignorant barrage of stereotypes in Des Moines. “So they literally have no habit of showing up on Monday.”
Has he not heard of the working poor? The problem isn’t that these kids aren’t working; it’s that they don’t have time with their parents, who often toil day and night, at more than one job, and earn next to nothing.
Newt’s the kind of person whom child labor laws were created to curb. He sounds like a benign despot with a colonial subtext: Until I bring you the benefits of civilization, we will regard you as savages.
He’s Belgium. The poor are Congo.
A lot of the Gingrich surge is based on the right-wing fantasy that he’ll unmask Obama as an idiot
Andrew Sullivan:
A reader writes:
I spent Thanksgiving with my family of formerly-sensible moderates and conservatives. Every one of them has morphed into a Gingrich fan. As much as the commentariat likes to talk about electability, the just-regular-folks I spent the holidays with talked only about how Newt would “hammer” the President during debates. “Can you imagine,” my sister said, her eyes as lit-up as a child’s on Christmas morning. “When Obama starts that smartest-guy-in-the-room shit, Newt’ll shut him up.” No one talked about policy or even politics. This is a mob storming the Bastille, cheering the guillotine, and Gingrich is their most likely Robespierre.
Is that feeling widespread enough to get a loon like Gingrich elected? I hope not, and don’t think so. But it’s enough to get him nominated, and anyone who doubts that needs to get out more. There’s a big slice of the electorate that has lost all perspective. The only thing they’re interested in is the visceral joy of watching someone destroy and humiliate “that damned Obama.” They’re convinced that Gingrich is just the guy to administer the rough justice they crave, and whether he’s electable or would even be good for the country simply doesn’t enter into their thinking.
L.A. Times:
[…] Shortly after Mitt Romney resigned from Bain Capital in 1999 to run the Olympics in Salt Lake City, potential investors received a prospectus touting the extraordinary profits earned by the private equity firm that Romney controlled for 15 years.
During that time, Boston-based Bain acquired more than 115 companies, according to the prospectus. Bain’s estimated annual returns were more than five times that of the Dow Jones Industrial Average in the same period.
Now a front-runner for the Republican presidential nomination, Romney says his Bain experience shows he knows how to create jobs. He often cites Bain’s investment in a little-known office supply store called Staples, which now employs more than 90,000 worldwide.
[…]
But a closer examination of the prospectus paints a different picture of Bain’s operation. Under Romney’s leadership, Bain became one of the nation’s top leveraged-buyout firms, helping lead a trend in which companies were acquired using debt often pledged against their own assets or earnings.
Bain expanded many of the companies it acquired. But like other leveraged-buyout firms, Romney and his team also maximized returns by firing workers, seeking government subsidies, and flipping companies quickly for large profits. Sometimes Bain investors gained even when companies slid into bankruptcy.
Romney himself became wealthy at Bain. He is now worth between $190 million and $250 million, much of it derived from his time running the investment firm, his campaign staffers have said.
Bain managers said their mission was clear. “I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”
Bain’s top 10 dollar investments under Romney — averaging $53 million — spanned a number of sectors, including healthcare, entertainment and manufacturing. The firm’s largest investment was its 1999 buyout of Domino’s Pizza, into which Bain put $188.8 million, eventually reaping a fivefold return.
Four of the 10 companies Bain acquired declared bankruptcy within a few years, shedding thousands of jobs. The prospectus shows that Bain investors profited in eight of the 10 deals, including three of the four that ended in bankruptcy.
[…]
Leveraged buyouts allow investors to purchase businesses with the acquisition funded sometimes by significant amounts of debt. To critics, these leveraged deals can make acquired companies more vulnerable to economic downturns, leading to a greater likelihood of bankruptcy and job cuts. At the same time, the deals sometimes introduce discipline to firms and even whole industries that need it.
Either way, Bain investors typically profited.
That was true in the case of GS Industries, the 10th-biggest Bain investment in the Romney years. Bain formed GSI in the early 1990s by spending $24 million to acquire and merge steel companies with plants in Missouri, South Carolina and other states.
Company managers cut jobs and benefits almost immediately. Meanwhile, Bain and other investors received management fees from GSI and a $65-million dividend in the first years after the acquisition, according to interviews with company employees.
In 1999, as economic challenges mounted, GSI sought a federal loan guarantee intended to help steel companies compete internationally. The loan deal was approved, but in 2001, before it could be used, the company went bankrupt, two years after Romney left Bain.
More than 700 workers were fired, losing not only their jobs but health insurance, severance and a chunk of their pension benefits. GSI retirees also lost their health insurance and other benefits. Bain partners received about $50 million on their initial investment, a 100% gain.
“Bain was demanding certain financial performance with no understanding of what the problems were on the ground,” said David Foster, a former steelworkers union official who negotiated labor contracts with GSI management from 1994 until the bankruptcy. He said Bain “bled the company,” withdrawing cash for dividends and management fees even as circumstances in the steel industry deteriorated.
“If I were looking for effective management of a project, a company or a country, this is exactly the kind of management I would not want to have,” Foster said of Bain. “Bain partners think the profitsthey made are a sign of their brilliance. It’s not brilliance. It’s lurking around the corner and mugging somebody.”
“It makes me sick,” said Steve Morrow, a retired GSI steelworker, recalling what happened to his fellow workers after the Kansas City shutdown. Some top managers received bonuses from Bain, he said. “But the salaried and hourly people ended up with the shaft.”
Union officials say they tried to work with GSI management and Bain to assure workers and retirees that they would have some benefits even if the heavily indebted company went under. But they said their appeals fell on deaf ears during and after the time Romney was running the firm.
Greg Sargent:
For Senate Democrats, the most important vote on the payroll tax cut extension last night may not have been the one on the Dem proposal, but the one on the GOP proposal. When a majority of Republicans voted against the GOP plan — which would have been funded by spending cuts — that signaled that many Senate Republicans seem to oppose any payroll tax cut extension, not just taxing the rich to pay for it.
With this in mind, Senate Democrats have decided to increase the pressure on Republicans on the issue by holding yet another vote on the extension next week, a senior Senate Democratic aide says.
“There will definitely be another payroll tax cut vote next week,” the aide says.
Senate Democrats are willing to discuss alternate ways to pay for the extension. They are considering offering Republicans a range of possibilities, from sticking with the millionaire surtax as is, to adjusting it and finding more money elsewhere, such as in raising certain fees that might attract more Republican support.
The idea here is that by voting against their own proposal, Republicans may have further boxed in those GOP Senators who eventually want to vote Yes on the extension. Before, they could vote No on the Dem plan and excuse it by saying the GOP had an alternative. Earlier this week, Mitch McConnell suggested that a majority of Republicans would back that alternative. Now that this didn’t happen, Dems are hoping, it will be harder for Republicans to explain any continued opposition and will weaken their position when talks over the next version begin.
“By showing that they couldn’t even keep their own caucus together on their own proposal, they have frittered away their leverage in negotiations,” the Dem aide says.
Now, Dems are hoping that those GOPers who want to find a way to back the extension will feel even more pressure to do so when a modified version is voted on next week. Stay tuned.
House GOP Plan To Attach Keystone XL Poison Pill To Payroll Tax Cut Package
Rep. Lee Terry (R-NE), the biggest proponent of the Keystone XL tar sands pipeline in Congress, expects a bill stripping President Obama of authority over the pipeline’s approval and giving it to the Federal Energy Regulatory Commission will be folded into the year-end House unemployment/payroll tax holiday package, according to Politico’s Darren Goode.
Walker’s new plan: Charge protesters big, big money.
TPM:
Wisconsin Gov. Scott Walker’s administration is rolling out a new strategy to deal with the waves of protests that have fallen upon the state Capitol, ever since he rolled out his anti-public employee union legislation, and which have given rise to the recall campaigns targeting him and other Republicans: Make the protesters pay for all the costs of the increased event security.
As the Milwaukee Journal Sentinel reports, the Walker administration announced the new policy on Thursday, and it will be phased in by Dec. 16. Under the policy, groups of four or more people must request permits at least 72 hours in advance, for events at the state Capitol or other state buildings.
In addition, organizers would have to pay for the extra Capitol police officers, at a rate of $50 per hour per officer — plus costs for police officers brought in from outside agencies, according to the costs billed to the state. The police payment would have to be tendered in advance, as a requirement for getting a permit. Afterwards, organizers would then be charged for any clean-up costs.
The new rules have First Amendment experts asking some questions:
Edward Fallone, an associate professor at Marquette University Law School, said the possibility of charging demonstrators for police costs might be problematic because some groups might not be able to afford to pay.
“I’m a little skeptical about charging people to express their First Amendment opinion,” he said. “You can’t really put a price tag on the First Amendment.”
…
Bob Dreps, a lawyer who handles First Amendment cases including work for the Journal Sentinel, noted that the state can put some restrictions on the “time, place and manner” of free speech. But he said it was “laughable” to define a rally as four or more people.
“They still have to be reasonable on their face,” Dreps said of the rules.
When asked for comment, state Democratic Party spokesman Graeme Zielinski told TPM: “This is more evidence of Scott Walker running Wisconsin like a Banana Republic, with no regard for our traditions or norms. This is an administration obsessed with quashing dissent and demeaning all democratic tools available to citizens who right now are rising up against it. It is un-American.”
Starting this past February, when the legislation was first rolled out, there have been many protests at the Capitol, some of which attracted tens of thousands of people. In some ways, the protests were arguably the true forerunner of the Occupy Wall Street movement.
During the most heated moments, when protesters were staying day and night in the Capitol, police were brought in from around the state to guarantee security — with a reported increase in law enforcement costs of $8 million, for February and March.
This reporter was flown out to Madison for those protests, and can say that things actually went very smoothly, with demonstrators cooperating with police and maintaining some sense of order. Though it was certainly very, very loud, there was also a lack of any violent incidents — an amazing thing, when one considers that there were so many amassed angry people.
At one point, the Walker administration attempted to shut the demonstrations down by going to court, and stating in submitted documents that there had been multi-million dollar damages to the building. However, they quickly backed away from the multi-million claim, when it was found that there had been no professional estimate. However, that number would go on to be touted on Republican talk radio and other venues.
A professional estimate that was done much later, revised the figure way down to $270,000 — and found that for even this, any damage was a matter of the crowds massively accelerating normal processes of wear and tear on the building, rather than any pattern of vandalism: “Essentially the building experienced three to five years of wear within a two-week period.”
Rick Perry Fails Govt 101: Claims Executive Orders Can Repeal Laws Passed By Congress
ThinkProgress:
During Mike Huckabee’s Presidential Forum on Saturday night, Rick Perry repeatedly insisted that the president has the authority to block the implementation of the Affordable Care Act, despite a recent Government Accountability Office report finding to the contrary. “The executive order obviously gives you that authority,” Perry repeated four different times to Virginia Attorney General Ken Cuccinelli, who quizzed Perry on the executive branch’s authority to eliminate a law duly passed by Congress:
CUCCINELLI: You said if elected you would issue an executive order to block the implementation of the federal health care law. What is your authority to unilaterally invalidate a law passed by Congress and signed by the president?
PERRY: Well, obviously an executive order. […]
CUCCINELLI: As a president, it sounds like you’re ready to simply use an executive order to void this law or large parts of it that you don’t agree with.
PERRY: Absolutely. And I think…
CUCCINELLI: What is your authority for that?
PERRY: The executive order obviously gives you that authority, but also as I said earlier, having men and women in those agencies that are going to share your philosophy…
CUCINELLI: You are taking the position that you can stop the implementation of a law passed by Congress, signed by the president, with an executive order?
PERRY: I am saying we can stop parts of it. The other parts of it, obviously would have to be done from the rules standpoint…
[…]
But a Government Accountability Office report out just last week found that while a president would be able to alter certain regulations, issuing waivers through executive authority would “likely conflict with an explicit congressional mandate and be viewed ‘incompatible with the express…will of Congress.’”
“A President would not appear to be able to issue an executive order halting an agency from promulgating a rule that is statutorily required by PPACA,” the report said. “A President would not appear to be able to issue an executive order halting statutorily-required programs or mandatory appropriations for a new grant or other program in PPACA.”
Ron Paul: ‘It Wasn’t Lack of Regulation That Caused the Enron Scandal’
J Bernstein with careful explanation of the obvious truth: Newt ain’t gonna win
The New Republic:
Newt Gingrich is having an impressive national polling surge. His chances of grabbing the GOP presidential nomination have spiked up to over 30 percent atIntrade this week, and the media is full of stories about whether it’s time to start taking him seriously. Here’s my advice: don’t. None of the recent polling means he’s going to win the Republican nomination, nor does it even mean that he’s going to have a serious shot at it. Newt is still the same wildly unelectable candidate he was five minutes ago, and the polls that say otherwise are no better indicator of voters’ true preferences than a game of darts.
The reasons why we don’t have to take Newt seriously are many, but the most obvious is that, despite his recent polling, he’s still the same candidate with all the same baggage. He’s still got his history of deviations from party orthodoxy on practically every issue, and the ethics violations, and the marital problems. He’s still the same guy who wound up not being trusted at all by those who worked with him when he was in office. And he’s still got a long history of just not being very popular with anyone outside of the most intense of intense partisans—and even they are likely aware that he’s risky at best and more likely pure poison in a general election.
The lack of endorsements by party actors is the second factor working against Newt, and it suggests that the people who have the most at stake in the nomination see him the same way as I do. We’ve seen this year (Donald Trump?!?) and in the past (John Anderson 1980? Jerry Brown 1992? Rudy Giuliani 2008?) that practically anyone can get a rush of attention and therefore a surge in the polls, and if it’s timed right that can even translate into winning a few delegates. But ever since the early 1980s, when the modern selection process became fully in place, no one has come close to winning a nomination without strong support from party officials, elites, and assorted activists. No one similar to Newt has ever received that kind of support, and so far he hasn’t either: Just as was the case with Bachmann and Cain, he’s surging in the polls without winning over politicians, GOP-aligned organized groups, or other conservative opinion leaders. That rank-and-file Republicans, who are generally not aware of his weaknesses, are willing to say that they would hypothetically vote for him just doesn’t impress me as a reason to believe there’s anything to it.
Indeed, if there’s one thing that the long history of post-reform nomination politics tells us, it’s that large national polling surges can rise—and dissipate—overnight. That’s been true since Ed Muskie was inevitable in 1972. And it’s obviously more true than ever this year, with Michele Bachmann, Rick Perry, and Herman Cain all having surge-and-collapse cycles. So there’s just no reason to get all hyperventilated about Gingrich’s surge. Yes, we’re a bit closer to the Iowa caucuses, and it’s certainly possible (though hardly certain) his bubble will survive through that contest. But that’s only Iowa. There’s plenty of time for it to burst well before the bulk of the delegates are chosen, which won’t happen until March.
The main reason for all this instability in the polls is that most Republicans just aren’t paying very much attention to the contest right now. That’s hard for the sorts of people who read The New Republic to accept, because for us politics is an active ongoing part of our lives, verging for some on an obsession. But that’s not how it is for most people. Even for those who will eventually care enough to vote, politics most of the time is background noise and an occasional conversation topic, not something to stay up-to-date on; it’s the difference between season ticket holders and people who start watching when the playoffs begin.
Moreover, most rank-and-file Republican voters just don’t care very much about the subtle differences between Romney and Cain and Perry and Gingrich and the rest. They pretty much like ’em all; after all, they’re all basically conservatives, and they’re all Republicans, aren’t they? The one that they’ll pick if they happen to get polled is therefore most likely going to be whichever one they’ve most recently heard something positive about, which in most cases probably boils down to whoever has been in heaviest rotation on Fox News recently. Two months ago that was Prince Herman. Now, it’s Newt. Current poll numbers, in other words, aren’t a good measure of firm decisions about who folks are going to support; they’re just placeholder answers for a question that the overwhelming bulk of Republicans haven’t really thought about much yet.
This doesn’t represent exceptionally irrational behavior on the part of GOP primary voters, either. After all, unless they live in Iowa or New Hampshire, voters won’t ever be choosing from this unwieldy ten candidate (or so) field, and the odds are good that for most Republicans, in most states, they’ll never have to make any choice since the nomination will be wrapped up before it gets to them. So why should they waste their time trying to figure outwhich one is the “real” conservative? Why go through the painful business of choosing sides? Picking a horse entails (as Democrats might recall from four years ago) finding things to dislike about a politician who you actually have nothing at all against, used to like, and will like again in the future. Not to mention potentially taking sides against your friends and neighbors, instead of agreeing with them about politics as you normally do (since most of us are surrounded much of the time by co-partisans). Much better to avoid the risk of cognitive dissonance and ignore the whole thing or treat it as entertainment until decision time comes. And with any luck, you can skip it and go straight to the part where you get to go back to disliking Barack Obama.
In other words, the reason polls can jump around so much this far in advance of the voting in most states is that pushing people to pick a candidate creates a temporary preference where one may not have existed before the respondent answered the phone. The results are most likely merely an artifact of the fact of polling. And if the polls don’t reflect firm decisions, then there’s no reason to believe that the voters really want Newt.
POLLS
Occupy movement has 58/32 support in among CA voters
Poll: Gingrich leads in Iowa, surges in NH
Koch-Fueled Denial Flops: Independents, Other GOP Split w Tea-Party Extremists on Global Warming
WEDGE ISSUES
Did race cost Obama in 2008? A poli-sci round-up:
The Monkey Cage:
[See original article for all links.]
Erik recently blogged about a new paper (pdf) by Seth Stephens-Davidowitz that used Google searches to measure racial prejudice in American media markets and found this:
The estimates imply that racial animus in the United States cost Obama three to five percentage points in the national popular vote in the 2008 election.
The Google methodology is a viable way to grapple with people’s unwillingness to reveal racial prejudice in polls and surveys. Of course, one can criticize it—as Rebecca Greenfield does here—but an even better strategy is simply to see if Stephens-Davidowitz’s results are confirmed by recently published research using other kinds of measures. Here’s an example, from a recent paper in Political Psychology by political scientist Brian Schaffner (ungated; see also the rest of the issue, also ungated thanks to Wiley-Blackwell publishers):
In this paper, I introduce a relatively unobtrusive measure of racial salience to examine whether these initial interpretations are correct. I find that when race was a more salient factor for White voters, they were substantially less likely to vote for Obama and were more likely to think that Obama was focusing attention on African Americans during the campaign. I estimate that the salience of race for some Whites may have cost Obama as much as 3% of the White vote. Thus, this paper indicates that even in Obama’s historic 2008 campaign, African American candidates continue to face barriers to winning White support.
Emphasis mine. The effect is similar in size to what Stephens-Davidowitz find. Schaffner’s measure began with this prompt:
If you had to vote in an election but did not know any of the candidates competing, which pieces of information would be most useful for helping you decide who to vote for?
Then respondents simply asked people to rank several factors, including the candidates’ race, in terms of their usefulness. Schaffner finds that the higher people who ranked race as more useful were less likely to report voting for Obama—a relationship that was most evident among racial conservatives (in this study, opponents of affirmative action).
In fact, the effects in these studies are comparable to the effects in other studies that do rely on explicit measures of racial prejudice. Although it is true that some people may be reluctant to reveal those sentiments in a survey interview, many people will. So Lewis-Beck, Tien, and Nadeau estimate that racial prejudice cost Obama 5 percentage points. Josh Pasek and co-authors arrive at the same estimate: 5 points.
However, a lot hinges on the relevant counterfactual. Stephens-Davidowitz imagines that every media market has a level of racial prejudice equal to that of the least prejudiced market. Pasek et al. study simulate the absence of both pro- and anti-black sentiments.
But another counterfactual is: what if we replaced Barack Obama with a white candidate—say, Hillary Clinton? In this study by Simon Jackman and Lynn Vavreck, they find:
The Democrats would have won the 2008 election regardless of who they nominated, but the average Democratic party nominee from the last 16 years, and either of Edwards or Clinton, would have done better against McCain than Obama, although in Clinton’s case, not by much.
What is “by much”? Half a point. But Edwards would have done about 3 points better—an estimate commensurate with those above.
So contra my very preliminary back-of-the-envelope analysis a few months after the election, race may have cost Obama in 2008. But the hypothetical Clinton vs. McCain race is important. It’s not enough just to imagine a world without racism—whether measured with explicit questions, implicit questions, or Google searches. It may be equally relevant to imagine a world without a black candidate.
UPDATE: See also the study by Benjamin Highton in the comments.
AND IN OTHER NEWS…
Flowchart of a rational discussion
Caveat: This chart is about debate and conversations that are supposed to be debate-like. It doesnot apply to every conversation you have. Therefore, the principles of this flow chart are not meant to be used in fights you have with your spouse.
Should you choose to disregard that little bit of common sense, under no circumstances shall you imply that you learned your tactless conversational tactics via this post.
You’ve now been warned. Thus, any misapplication of information contained herein that leads to marital strife is not the responsibility of this blogger and only represents your personal jackwagonry.
Judy Collins’s New Book: Suicide, Alcoholism, Nude Photos, and More
TAKE ACTION
Gifts That Say You Care
NICHOLAS D. KRISTOF:
[…] For starters, the Web sites of the major humanitarian organizations offer alluring holiday gifts. Through the International Rescue Committee, $30 buys a flock of chickens for a needy family. At CARE, $29 gets a girl a school uniform. Through Heifer International, you can stock a fish pond for $300. With Mercy Corps, $69 can start a female entrepreneur in the sewing business.
Beyond those organizations, here are some lesser-known charities that may help put a grin on Grandma — and on someone else.
Helen Keller International fights blindness and malnutrition around the world with simple and cost-effective programs. One of the best ways to improve children’s health is to focus on micronutrients, like iodine, vitamin A and zinc — and in some cases to fortify foods with nutrients at a negligible cost. Helen Keller International, at hki.org, is a leader in that effort, and gets more bang for the buck than almost any group I can think of.
And those glasses I mentioned for a schoolchild? That’s a Helen Keller International program, ChildSight, which operates in the United States as well as in Indonesia and Vietnam. Schoolchildren are screened for vision problems, and those who need glasses get them. Providing glasses costs just $25 per child — which is a much better value than a sweater that will sit in a drawer for eternity.
Against Malaria has a simple model: $5 will buy a bed net that protects several people from mosquitoes that carry malaria. All the money that is donated goes to buy nets, and Against Malaria, atagainstmalaria.com, gets a No. 1 rating and a rave review fromGiveWell, which rates charities.
In a malarial area in Cambodia many years ago, I met a grandmother who was looking after several small children after their mother died of malaria. The family had one bed net, and every night the grandmother had to decide which children would sleep under it — and which one she would leave outside.
For the price of a stocking stuffer, you can spare a mother or grandmother that wrenching choice — and potentially save a life.
Reading Is Fundamental is an American program that promotes literacy in high-poverty communities in America. Its government financing has been slashed in the tight budget environment, so it needs support.
The group is a public-private partnership with 400,000 volunteers, bringing huge efficiencies. It provides new, free books to four million children across the United States, and encourages the kids to read. Information is at rif.org.
The Citizens Foundation was started by Pakistani businessmen concerned about their country, and it builds terrific schools for needy children there. We’re seeing American-Pakistani relations spiral downward, and billions of dollars in American military aid to Pakistan haven’t accomplished much. The best way I can see to moderate Pakistan and defeat extremists is to bolster secular education.
When I travel in Pakistan, I see radical madrasas built by Wahhabi Muslim fundamentalists from Saudi Arabia and other countries, offering free meals to entice students. Fundamentalists donate because they understand the power of education to change a country. And we don’t even compete. Information is at thecitizensfoundation.org.
GEMS is a New York-based organization supporting American girls who have been trafficked, prostituted or otherwise sexually abused. It provides shelter and education for those rescued from pimps and provides some of the first nurturing many have received.
GEMS stands for Girls Educational and Mentoring Services. It was founded by Rachel Lloyd, herself a survivor of the streets who went on to earn degrees from Marymount Manhattan College and City College of New York and wrote a searing memoir, “Girls Like Us.”
Prostitution of children should be a stain on the national conscience, and GEMS helps survivors while using peer counseling to prevent the trafficking in the first place. It is at gems-girls.org.
•
And here’s a special holiday message you can pass on to university students: tell them that I’m announcing my annual win-a-trip contest. In 2012, for the sixth time, I will take a student with me on a reporting trip to the developing world to try to shine a light on neglected issues. These trips have been life-changing for past winners. Information about how to apply is on my blog, nytimes.com/ontheground, and thanks in advance to the Center for Global Development for again helping narrow the applicant pool down to finalists.
QUOTE OF THE DAY:
“A nation that continues spend more money on military defense than on programs of social uplift is approaching spiritual doom.” ~MLK Jr
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