“She Will Be Heard”: Elizabeth Warren Knows Where A Lot Of The Bodies Are Buried, Puts AIG On Notice
When new members arrive in the US Senate, they are supposed to take a seat on a back bench and listen quietly for a couple of years. That is not in Elizabeth Warren’s nature. She had been a US Senator from Massachusetts for only about a week when she broke with etiquette. Warren was outraged that AIG investors were urging the insurance giant’s directors to join them in a lawsuit against the federal government, claiming damages from the federal bailout of their company during the financial crisis.
The freshman senator sent out a tartly worded statement to her many fans and followers. “AIG should thank American taxpayers for their help—not bite the hand that fed them,” Warren wrote. The message swept the blogosphere like wild fire. The AIG directors folded the next day. It is perhaps mistaken to assume her voice alone stopped this corporate ingratitude in its tracks, but that may well be the message absorbed in Washington politics. Try not to provoke this new senator, especially on the stuff she knows a lot about. She might bite back.
Indeed, Senator Warren has renewed the accusation about the AIG bailout she had made a year ago during her Senate campaign. While the Federal Reserve pumped a fortune ($182 billion) into saving AIG from failure and thereby protected Wall Street megabanks from huge losses, the Treasury Department was arranging its own “sleuth bailout,” as Warren charged. Treasury granted an exception to the standard tax rules that delivered billions more to AIG in the form of a special tax break.
The company was effectively relieved from paying any taxes despite the fact that it has returned to profitability and repaid the Federal Reserve loans. The senator called on her supporters to join a campaign to end AIG’s special tax break. “Enough is enough…,” she wrote. “These special tax giveaways give AIG a competitive advantage over its competitors—all the while inflating AIG’s profit numbers and compensation for executives.”
What separates Elizabeth Warren from your typical newcomer to Congress—in addition to the rare gutsiness—is her deep knowledge of banking and finance. For many years, while she taught at the Harvard law school, Warren was a lonely crusader, exposing predatory bankers and the cruel terms by which millions of families were driven into bankruptcy.
Her reputation led to appointment as the chair of the Congressional Oversight Panel that investigated the AIG bailout in great depth. The COP final report is itself an extraordinary document of government—clear and concise, an unflinching analysis that describes exactly how the Federal Reserve and the Treasury failed to serve the public interest in their incestuous bailout of Wall Street titans.
“The AIG rescue demonstrated that Treasury and the Federal Reserve would commit taxpayers to pay any price and bear any burden to prevent the collapse of America’s largest financial institutions,” Warren’s report concluded.
She will be heard. The new senator will serve on the Senate banking committee and she already knows where a lot of the bodies are buried. I suspect some of those disgruntled AIG investors are wishing they had kept their whining to themselves.
By: William Greider, The Nation, January 10, 2013
The nation’s largest private employer, Walmart, has announced that beginning in 2013 it will begin drastically reducing the number of new hires who receive health insurance coverage, according to The Huffington Post.
However, its planned policy of not offering new employees health insurance if their hours dip below 30 a week indicates that they intend to take advantage of Obamacare’s new obligation to provide coverage for those who cannot afford it. And with several Republican governors promising to deny the funds for Medicaid expansion, the new policy could lead to a swift increase in the uninsured.
In several states, Walmart tops the list of employers whose employees seek government-funded health care and food assistance for their families, forcing taxpayers to subsidize its low prices and low wages.
Former Secretary of Labor Robert Reich points out that despite the incredible wealth of Walmart’s primary stockholders, the Walton family, its employees earn wages that may not even keep them out of poverty.
“The average Walmart employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits,” Reich wrote in one of his recent columns encouraging the retail giant’s employees to organize. Across the country a small percentage of Walmart’s employees walked out on Black Friday, protesting the company’s alleged retaliation against workers who speak out for better working conditions.
“Organizing makes economic sense,” Reich wrote.
In 2006, Walmart responded to criticism by greatly expanding the number of employees to whom it offered health insurance. They reduced the number receiving coverage in 2011.
“This is another example of a tremendous government subsidy to Walmart via its workers,” Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara told The Huffington Post.
This change in policy will push the number of employees without benefits closer to one half.
Critics have said that Walmart provides a huge benefit to poor consumers by multiplying the value of food stamps with its low prices. But to Doug Henwood, that argument misses the central problem with the impact that Walmart has had on our economy:
And, yeah, it’s nice that Walmart has been able to provide a working class facing at best stagnant wages with lots of cheap stuff, but Walmart has itself had no small effect on dragging average wages down. It’s not just that they’ve been an inspiring business model for the rest for corporate sector, impressed by the chain’s growth and profitability. That’s led to endless rounds of outsourcing and speedup. But also by lowering the cost of reproduction of the working class, to use the old language, they’ve made it easier for employers to keep a lid on wages.
Add into the equation that taxpayers are subsidizing the costs of these wages and you have a formula for a permanent underclass underwritten by a government that can do little else than providing basic health care and sustenance.
By: Jason Sattler, The National Memo, December 3, 2012
The Republican National Convention’s organizers probably thought they were being clever. They announced this week that on the second night of the gathering — with local, state, and federal officials standing by to help in the event of a hurricane — they’d host a “We Built It” day.
The idea, of course, is to mock President Obama’s belief that public institutions and government investments help create a society in which the private sector thrives. Republicans intend to host their “We Built It” day in an arena largely financed by taxpayers.
Wait, it gets worse.
On the day that the GOP convention will tout Fox-fueled myth “We Built It” as its primary theme, Delaware Lt. Gov. candidate and small business owner Sher Valenzuela is slated to deliver a speech about small business issues. But contrary to the evening’s theme, Valenzuela’s company, First State Manufacturing, has received millions of dollars in federal loans and contracts. Valenzuela has not only attributed her success in part to this outside assistance, but urged other small business owners to follow the same strategy of seeking government funds.
Media Matters found that Valenzuela even gave a presentation earlier this year on her small business success, crediting the use of “millions of dollars in secure government contracts.” She encouraged other entrepreneurs to take advantage of public institutions and government investments to help their businesses get ahead.
Making matters slightly worse, a featured guest at a Paul Ryan event yesterday boasted about getting government funding to help build his business, and in a new op-ed on his private-sector background, Mitt Romney boasted today about the success of many Bain businesses, several of which have benefited from government largesse.
As attacks go, this out-of-context smear has always been problematic. Romney was desperate to prove that American free enterprise thrives without the support of government, but when he pointed to examples, they all thrived thanks to the support of public institutions and tax dollars. This happened over and over and over and over again, ultimately proving that the entire line of attack is self-defeating.
And the problem will apparently continue, as if self-awareness no longer matters at all.
By: Steve Benen, The Maddow Blog, August 24, 2012
If taxpayers want better results from Congress, they must stop paying their elected officials for failure. After all, you get what you pay for.
That’s why I’ve introduced a bill called No Budget, No Pay. It’s not your typical congressional reform. It is the first effort to pay Congress for performance, the way that an increasing number of doctors, teachers, corporate executives, athletes, and other professionals are paid.
The bill, H.R. 3643, is so simple that it sells itself. If Congress fails to pass a budget and all 12 appropriations bills by the beginning of each fiscal year, October 1, congressional pay will stop. If Congress is even a day late, the penalties could be hundreds of dollars per day per congressman. Longer delays mean greater penalties (and the missed pay cannot be retroactively restored). It’s a harsh regime, but a necessary one. Our nation suffers when Congress fails to pay America’s bills on time.
Today’s Congress has not passed a budget in three years and has not completed all of its budget and appropriations bills on time in 15 years. Few incumbents can even remember meeting these obligations. This is no way to run a superpower.
Congress is so accustomed to today’s back-loaded schedule that it cannot imagine efficiency. Congress barely meets in January and February and, this year, the House was in session for only 10 days in May. Each house delights in passing bills that are dead on arrival in the other body. No Budget, No Pay would make the House and Senate actually talk to one another again. The heat from members to meet the deadline would be so intense that Congress, as a whole, could start forging deals.
A conventional reform would simply levy a flat penalty to punish Congress for tardiness. That’s like yanking a teenager’s allowance because he misbehaved. The goal should be to encourage better behavior. The threat of cutting congressional pay would do precisely that.
Properly understood, No Budget, No Pay is gentler than you think. It will not result in a single senator or congressman losing any pay. The reason: When everyone has an incentive to meet a deadline, you naturally finish on time, even early. For example, when California legislators tried it, they suddenly got much better at meeting deadlines. This is the power of aligned incentives: When everyone is on the same team, you have a much better chance of winning. The threat of punishment is more effective than the punishment itself.
This new type of reform engages the most powerful lobbyists on earth: congressional spouses. No one wants to miss a paycheck, especially spouses who are tired of excuses. These spouses will force Congress to work much harder much earlier in the winter and spring, instead of procrastinating into the summer and fall. Remember, members’ spouses have never let Congress miss a major holiday like Christmas. No Budget, No Pay puts October 1 in the same elite category as December 25.
The dirty secret of today’s Congress is that many members actually benefit from missing our financial deadlines. When they hold up negotiations, highlight a parochial cause, and take a budget or appropriations bill hostage, they get lots of free publicity and become a hero to the special interests they are protecting. This helps them finance their reelection campaigns. Some of their colleagues will honestly object to the delays, but most are just waiting for their own chance to grandstand. Meanwhile, taxpayers suffer because government agencies are crippled with unpredictable funding starts and stops on a month-to-month or even week-to-week basis. Sometimes a key agency like the Federal Aviation Administration is even forced to shut down many of its operations, as happened last August.
Having experienced (and often envied) their colleagues’ selfishness, many members are naturally afraid to be held accountable for the behavior of Congress as a whole. They are particularly afraid to vouch for the other body, either the House or Senate. Social scientists call this a collective action problem. It seems foolish to bet a paycheck that any group of politicians will be prompt. But these doubters have never been in a capitol where everyone was desperate to get paid.
Some fear that wealthy colleagues could afford to grandstand, while poorer members would be deprived of that free publicity. This is possible, but the rich are just as vulnerable to peer group pressure, sometimes more so, because they do not want to be stigmatized for being wealthy. The vast majority of members in the Senate and House need their paychecks and would be quick to ostracize anyone who slowed the budget process down, particularly a rich colleague. Fearing for their positions, party leaders would also make sure that wealthy members were not able to obstruct.
The task is an urgent one. The bill currently has 10 cosponsors in the Senate and 73 in the House. We need more cosponsors now, because there are only a few weeks left in this session of Congress before the November elections. Of course, Congress will miss its October 1 deadline again this year, but passage of No Budget, No Pay this fall would help us meet the deadline next year, in October of 2013. Unless Congress passes No Budget, No Pay this session, no adjustments to congressional pay will be possible until at least 2015, because the 27th Amendment requires an intervening election before any adjustment to congressional pay.
Since no president or Supreme Court has the constitutional power to reform Congress, Congress must heal itself with help from voters back home. Ultimately, Congressional medicine is like veterinary medicine: It must be strong enough to work, and tasty enough to swallow. No Budget, No Pay meets all these tests. It is hugely popular with voters, potent enough to make Congress meet the annual October 1 deadline, and palatable to members once they understand that they will be paid — because they will finish their work on time.
By: U. S. Rep Jim Cooper, The Atlantic, July 26, 2012
This week, the New York Times reported that Joe Ricketts, a right-wing billionaire and founder of TD Ameritrade, is soliciting multi-million dollar ad proposals to attack President Obama. One such proposal, leaked to the paper, was a $10 million, racially-charged campaign entitled “The Defeat of Barack Hussein Obama: The Ricketts Plan to End his Spending for Good.” The proposal, which center on Rev. Jeremiah Wright, suggests hiring an “extremely literate conservative African-American” to break down Obama’s image as a “metrosexual, black Abe Lincoln.”
Ricketts moved quickly to publicly reject the plan after it leaked. His spokesman said it “reflects an approach to politics that Mr. Ricketts rejects and it was never a plan to be accepted but only a suggestion.” (The statement seems somewhat disingenuous as the Ricketts had already given “preliminary approval” for the $10 million concept after seeing a separate ad about Jeremiah Wright.) Nevertheless, Ricketts’ spokesman confirmed his intention spend money attacking Obama through an organization he controls called “Ending Spending Political Action Fund.”
There is one area, however, where Ricketts is much more open to government spending. He’s seeking a massive government subsidy for the Chicago Cubs, which he owns with his family, to renovate Wrigley Field. Here is the deal the Ricketts family is seeking, via Crain’s Chicago Business:
That means $300 million is needed for the ballpark proper.
Half would come from the team, presumably in increased revenue from more signage inside Wrigley and retail and other entertainment in what amounts to a game-day carnival on Waveland Avenue on Wrigley’s north side and Sheffield Avenue to the east.
And half would come from $150 million or so in bonds to be retired with increased revenue from the existing city and Cook County amusement taxes on ticket sales. Specifically, debt service would get the first 6 percent in growth above a base level of around $15 million a year now.
But it’s a little more complicated than that.
The team also wants a 50 percent cut of any increase in amusement tax revenue growth above 6 percent. And unlike the bonds, which would be retired in 30 or 35 years, that would be forever.
So Joe Ricketts and his family not only want a $150 million subsidy directly from taxpayers but also a large chunk of tax revenue from the city in perpetuity. In other words, taxes from the City of Chicago would no longer go to roads, schools and police officers but also into Joe Ricketts pocket. Without this taxpayer welfare, the family will presumably let Cubs, which they acquired in a highly competitive bidding process in 2009, play in a stadium that is falling into disrepair.
Ricketts negotiating position seems completely at odds with his public stated political views. In a video posted by another organization he controls, Taxpayers Against Earmarks, Ricketts says “I think it’s a crime for our elected officials to borrow money today, to spend money today and push the repayment of that loan out into the future on people who are not even born yet.” Of course, that’s what he is attempting force the taxpayers of Chicago to do for the benefit of his team and his family.
At the same time, Joe Ricketts has plenty of disposable income available to attack Obama. A Ricketts spokesperson said future attacks on Obama would “be focused entirely on questions of fiscal policy.” Joe Ricketts, however, may want to focus on the fiscal policy of his baseball team. In 2011, the Cubs were “one of nine franchises in violation of MLB’s debt service rules.”
By: Judd Legum and Josh Israel, Think Progress, May 19, 2012