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“Show Your Invisible Hand”: The SEC Should Make Corporations Disclose Political Contributions

A core assumption of the Supreme Court’s opinion in 2010’s troubling Citizens United case, which broadened corporations’ abilities to use their money for political purposes, was that shareholders could decide for themselves whether they agreed with the ways that money was being spent.

According to Justice Anthony Kennedy, who delivered the opinion for the Court, “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”

The problem with this particular assumption, which economists call perfect information, is that corporations are — surprise surprise — not legally obligated to share information on political spending with their shareholders or the public. In August 2011, a group of high-profile law professors filed a petition with the Securities and Exchange Commission, calling on the agency to require public companies to disclose what corporate resources they spend on political activities because “most political spending remains opaque to investors in most publicly traded companies.”

Why do companies spend money on politics? The answer seems obvious: they want to generate profits. They are seeking advantages like reduced trade barriers, government contracts, easier regulatory inspections, and lower tax rates. For more on this point, see my colleague Tom Ferguson’s recent paper with Paul Jorgensen and Jie Chen, which reveals how “Too Big to Fail” Wall Street firms and telecom companies have captured the GOP and the Democrats, respectively. (As an aside, isn’t it odd that the same companies orchestrating the expansion of the surveillance state are so concerned about their own privacy?)

But there is sufficient research to suggest there is another, more covert reason that has serious consequences for shareholders. In my recently published Roosevelt Institute paper on the costs and benefits of this disclosure rule, I cite several studies that show corporate executives frequently spend on politics for their own personal advantage rather than the company’s bottom line. These personal benefits include things like prestige, a future political career, star power, or assistance for political allies.

With these kinds of distorted incentives, the lack of information available to the public about corporate political spending puts shareholders and potential investors at enormous risk. Why would they want to invest in a company that is undertaking activities that are more likely to benefit its executives than its investors? Requiring corporations to disclose their political spending, on the other hand, would do the following:

—Enable investors to make informed investment decisions. Good information is always key to helping potential shareholders calculate the risk they are taking by investing in a company or helping current shareholders decide if they want to hold on to a company’s stock.

—Create the motivation for corporate executives to focus less on their own personal benefit and more on the political spending that would increase shareholder wealth. By disclosing their political activities, corporate executives would have less of an opportunity to waste company resources for their own advantage.

—Benefit corporations that already share their political spending information. Research suggests companies that already disclose SEC-required information enjoy a bump in stock returns when the particular rule is put in place.

Two years after the lawyers submitted their petition, File No. 4-637 is finally on the SEC’s official agenda and support for the disclosure rule is overwhelming. Recent polling finds that 79 percent of surveyed Republicans and nearly 100 percent of Democrats support the rule, and more than 600,000 public comments supporting the rule have been submitted to the SEC. Major institutional investors are also in agreement. Former Vanguard mutual fund CEO John C. Bogle, six state treasurers, CalPERS and other pension funds, and many more are also in support. The rule also has the endorsement of small-business owners across the country, as large companies have a competitive advantage over smaller businesses because of their ability to influence lawmakers and agencies through campaign contributions and lobbying.

The pushback against disclosure is typically about the costs of disclosure. But companies already have to document their political spending for the IRS, so the additional cost would be, at most, the few hours it would require an employee to copy and paste data from an internal file into a public one. Furthermore, companies already submit annual forms to the SEC. The political spending information would simply be a few additional lines of text added to these forms.

A more valid concern about this rule is that, if companies are required to disclose this information to the SEC, the information could be exploited by their competitors and harm the companies’ bottom line. But corporate political activities are already well known among industry competitors. In fact, sometimes political spending is even coordinated among industry groups. The people who are actually excluded from this information are the ones who need it most: investors.

At a briefing held this past Wednesday organized by the Corporate Reform Coalition, Senators Elizabeth Warren (D-MA) and Robert Menendez (D-NJ) called for the SEC to finally adopt this important rule. “There is no excuse,” said Warren, “There is no reason […] for saying a corporation wants to be able to spend shareholders’ money and not tell shareholders how that money is being spent.”

 

By: Susan Holmberg, The National Memo, November 1, 2013

November 2, 2013 Posted by | Citizens United, Corporations, Politics | , , , , , , | Leave a comment

“Contempt For Progressive Legislation”: The Severely Conservative Judge Who Just Ruled Against Birth Control

Nine years ago, the California Supreme Court upheld a state law similar to the Affordable Care Act’s rules requiring most employers to include birth control coverage in their employee health plans. The sole dissent in that case was Justice Janice Rogers Brown. Nearly a decade later, Brown got her revenge. Though no longer a member of California’s highest court — President George W. Bush appointed her to the United States Court of Appeals for the District of Columbia Circuit over the strenuous objections of Democrats — Judge Brown is now the author of a 2-1 opinion holding that religious employers can ignore the federal birth control rules. What was once a fringe view held by a lone holdout is now the law in the second most powerful court in the country.

Judge Brown’s opinion barely conceals her contempt for progressive legislation. Prior to her nomination to the D.C. Circuit, Brown labeled the New Deal a “socialist revolution,” and she likened Social Security to a kind of intergenerational cannibalism — “[t]oday’s senior citizens blithely cannibalize their grandchildren because they have a right to get as much ‘free’ stuff as the political system will permit them to extract.” Since joining the federal bench, she authored a concurring opinion suggesting that all labor, business or Wall Street regulation is constitutionally suspect. The very first sentence of her birth control opinion labels the Affordable Care Act a “behemoth.”

So there was never any doubt how Brown would vote on this particular challenge to women’s access to birth control. Her opinion was joined by Judge A. Raymond Randolph, a conservative George H.W. Bush appointee. Carter-appointed Judge Harry Edwards dissented.

Coincidentally, Brown’s opinion comes just one day after Senate Republicans reignited the filibuster wars by filibustering the first of three Obama nominees to her court. Currently, the D.C. Circuit is evenly divided between Democratic and Republican active judges, but a large number of Republican judges in partial retirement allow the GOP to dominate the court. Senate Minority Whip John Cornyn wrote in a Fox News op-ed that Republicans should prevent any of Obama’s nominees from being confirmed to this court to prevent Democrats from gaining a majority. Although federal appeals courts typically hear cases via randomly drawn three-judge panels, the court’s rules permit a majority of the court’s active judges to displace any decision reached by a three-judge panel.

Senate Democrats waged an unsuccessful effort to filibuster Judge Brown’s nomination during the Bush Administration — largely because of her strident opposition to programs such as Social Security — but that filibuster was eventually defeated after Republicans threatened to invoke the so-called “nuclear option” to eliminate filibusters of judicial nominees. The deal that allowed Judge Brown to be confirmed also paved the way for Judge Priscilla Owen’s nomination. Yesterday evening, Judge Owen authored an opinion reinstating a Texas anti-abortion law blocked by a lower court judge.

There is a lesson here for Democrats trying to decide whether to invoke the nuclear opinion in the D.C. Circuit fight that Senate Republicans started this week. When Republicans had the courage to demand what they wanted and put a serious threat behind it, they got two of the most conservative judges in the country. If Senate Democrats follow suit — either by forcing Republicans to cave or by carrying through on a threat to nuke the filibuster — they will also win their fight to get President Obama’s nominees confirmed.

 

By: Ian Millhiser, Think Progress, November 1, 2013

November 2, 2013 Posted by | Birth Control, Reproductive Rights | , , , , , , , | Leave a comment

“A Very Low Bar”: How A Crazy Senator Became A Sudden Darling Of The So-Called Respectable Right

Fanfare! Trumpets! There has been a Big Important Speech on the Future of Conservatism. Let’s take it Really Seriously. Sen. Mike Lee, Republican of Utah, went to the Heritage Foundation Tuesday and spoke. Milton Friedman and Irving Kristol were namechecked! Russell Kirk was quoted! The gas tax was proposed to be slashed 80 percent! Oh wait, I am supposed to still be mentioning the Serious parts.

I shouldn’t make fun, maybe. There are serious parts. Lee’s concern for “immobility among the poor,” the middle-class squeeze, and “cronyist privilege at the top,” and his desire to fashion a conservative response to them, is the right note for a Republican senator to strike. Amen to calls for “a new conservatism of the working and middle class,” because either we will get one or the failed attempt to give us one will prove it to be a contradiction in terms. Conservative intellectuals of a reformist bent welcomed the speech—Ross Douthat, Reihan Salam (they co-wrote a book on these themes), Rich Lowry, Jennifer Rubin. BuzzFeed political editor McKay Coppins called it a “lofty, agenda-setting speech” for its ringing declaration, “frustration is not a platform. Anger is not an agenda. And outrage, as a habit, is not even conservative” and for its forceful denunciation of the House Republicans’ sociopathic shutdown tactic, which futilely damaged the U.S. economy and very nearly caused the federal government to default—a narrowly evaded catastrophe.

Except, of course, Lee didn’t do that last thing. Lee was pro-shutdown! Other than Ted Cruz, he was probably the House Republicans’ most important ally in the Senate. And he did not denounce—or, in his case, repudiate—the shutdown tactics. So now you see why I couldn’t help but make fun.

I suppose if we set the bar low enough that insects can do the limbo with it, you could read his speech as endorsing a less insane way forward. But here is what happened Tuesday: One of Washington’s most staunchly pro-shutdown politicians, appearing at maybe Washington’s most important pro-shutdown organization, pointedly refused to condemn the shutdown or suggest he would not support a future shutdown if it meant trying to repeal the Affordable Care Act, a.k.a. Obamacare.

On the contrary, Lee said, “I am proud of my friend Ted Cruz and the dozens of others—including Speaker John Boehner and the House Republicans—who fought Obamacare, continue to fight it, and will not stop fighting it.” At the outset, he narrated, “It began with our effort to stop Obamacare—a goal that all Republicans share even if we have not always agreed about just how to pursue it.” Absent a declaration that he no longer agrees with how he pursued it, one is forced to conclude that he feels the same way now. Douthat, Salam, and Lowry do not mention this.

There is a broader point here. If I ever found the bulk of my political views articulated by somebody whose most prominent action ever—undertaken in the past month and unrepudiated—was as grotesquely irresponsible as what Cruz, Lee, and the House Republicans put us through, it would cause me to question my views. I would reflect upon the fact that Lee and I share these beliefs, and that he logically extends them toward something totally self-destructive and crazy. I would have to conclude either that he is correct to do this, and therefore that my views must be wrong and that I must change them, or that he is not worth listening to, because he takes perfectly good ideas and warps them into something powerfully hazardous. There is apparently no such reckoning among the right’s respectable intellectuals—most of whom did oppose the shutdown itself, and not only for pragmatic reasons.

But in the meantime, let’s stick to the matter at hand. Can’t all reasonable people agree to ignore Mike Lee completely until he says he was wrong about the shutdown? Should this be a controversial suggestion? Given the gravity of the threat of a future shutdown, isn’t that the only responsible response?

Salam highlights several promising policy sketches that Lee offered; and truly, it is hard not to appreciate a Republican concerned with work-life balance issues. But Salam and the others misrepresent Lee—who, Salam notes, holds a relatively safe seat, and so presumably may speak his mind. Giving parents greater flexibility isn’t Lee’s foremost priority. According to Lee, “The first and most important policy goal Republicans must adopt to improve the lives of middle-class families is, and will remain, the full repeal of Obamacare.” How? Again, we have no choice but to presume that Lee believes that a legitimate tactic for repealing Obamacare is, and will remain, shutting down the government and threatening its default. How about we hear Lee out, and maybe even talk to him, sometime after he puts his gun away.

 

By: Marc Tracy, The New Republic, October 30, 2013

November 2, 2013 Posted by | Conservatives, GOP, Tea Party | , , , , , , | Leave a comment

“Let’s Take A Step Back”: Despite Crappy Journalism, Things That Are Still True About Health Care

It’s been a pretty intense month on the health-care front, what with the beginning of open enrollment for the new exchanges giving rise to lots of disingenuous fulminating from Republicans, not to mention a whole lot of crappy journalism. Any time a story dominates the news for a couple of weeks, there’s a temptation to believe that what’s happening now will change everything. So I thought it might be a good idea to take a step back and remind ourselves about some things that are still true about the Affordable Care Act and still true about health care in America.

Over the long term, the problems with Healthcare.gov won’t have much of an effect on the success or failure of the law.

Yes, it has been a huge screw-up, with both the administration and the contractors sharing responsibility. Yes, it has caused a lot of people trying to sign up for new insurance a lot of hassle. But it’s the thing everybody’s focused on now in part because it’s the only thing happening with the law, until January 1st when a whole bunch of the law’s other provisions also go into effect. The problems with the web site are finite and fixable, and five years from now all this will seem like a minor footnote in the whole story.

Even if everything works perfectly with the ACA, we’re going to have a very expensive system for a long time.

The law did many things to try to “bend the cost curve,” including things like rewarding hospitals for reducing their readmission rates so there isn’t such an incentive to just pile on the procedures. But the fundamental fact is that America’s health-care system is far and away the most expensive in the world—nearly twice as expensive as the average for OECD countries—and it will still be very expensive for the foreseeable future.

There are many reasons why, but what they come down to is that there are lots of actors—insurance companies, hospitals, doctors, device makers—who make ungodly amounts of money off our health-care system, and unwinding all their influence and the points at which costs get driven up is unfathomably complicated. Other countries’ systems were designed by asking how good care can be delivered to everyone at a cost the country can afford; our system, outside of the government parts like Medicare, was basically designed by asking how to make sure everybody except patients can make as much money as possible. At its heart, the ACA doesn’t question that fundamental premise. So the curve may bend, but it won’t bend too sharply, and it’s starting from a very high place.

The expansion of Medicaid is the most significant thing the law did to help uninsured Americans.

It’s easy to forget, with all this talk about people on the individual insurance market, that they make up a small portion of the country. The most meaningful part of the ACA was always its expansion of Medicaid, promising to finally give insurance to millions of Americans who can’t afford it. So far, people signing up for Medicaid are significantly outnumbering those signing up for new private insurance, which isn’t surprising, especially given Healthcare.gov’s problems. And every time a poor family signs up for Medicaid, it’s cause for celebration—they’ll be healthier and more secure, they’ll be more productive at work, and the whole community benefits.

The Republican sabotage campaign against the ACA is unprecedented in American history. You can’t blame every problem the law has or will have on Republican sabotage, but this isn’t hyperbole. It truly is something we’ve never seen (here’s a recap). The only thing that comes close is efforts in the South to resist the school desegregation mandated by Brown v. Board of Education. That isn’t an excuse for any failures of the Obama administration, but it has made everything harder.

Republicans criticizing the ACA have no idea what they’d do to improve the health-care system. If you ask them, they’ll say, “Um … tort reform?” There are a very small number of conservative health-care wonks out there (like the people who came up with the plan that became Romneycare which became Obamacare!), but their ideas are laughably small-bore. Republicans are essentially satisfied with the pre-ACA status quo, with 50 million uninsured Americans and skyrocketing costs. That doesn’t necessarily mean that any particular critique they make of the ACA is wrong by definition, but it’s good to keep in mind.

There’s still no good reason your job should determine your health coverage. The linking of health insurance and employment is an historical accident. When wages were frozen in World War II, companies began offering insurance as a way to attract better workers, unions began demanding it as part of contracts, and today around 80 percent of American get their coverage through their job. One of the best things the ACA does is eliminate the “job lock” this produces, by making it illegal for insurance companies to deny coverage based on pre-existing conditions. Now you can quit your job to start that business you’ve dreamed of without worrying about whether you can get insurance. But the link between employment and insurance is just one more layer of complication that makes our health care system such an absurd kludge. Which leads to…

A single-payer-plus system would have made this whole thing simpler. Conservatives may roll their eyes and say, “Are you still going on about that?” but it’s something we should indeed keep talking about. The Affordable Care Act brings us to a system that is much better than what we have now, but still far worse than what it could be. I’ll continue to reiterate that we could have a system that satisfies the desires of both liberals and conservatives, insures everyone, and does it without all the layers of complication we suffer through now. If we wanted to, we could transition over time to a system like they have in France, with a basic, government-provided single-payer plan that covers every citizen, combined with a market for supplemental private insurance. That would give us the universal coverage and security liberals like, the ability to buy as much insurance as you want from a private company that conservatives like, and the efficiency and cost savings we all ought to like.

Would that be a big change? Sure. But it’s essentially what America’s seniors already have, and it has been very successful. They have their government plan so there are virtually no uninsured seniors, and they can buy Medigap coverage to give them extra benefits.

The ACA could make it easier to transition to a system where all Americans enjoy the same privilege. The exchange marketplace could be transitioned to become the place everyone buys supplemental insurance. We now have a system where a significant chunk of the population—the elderly and poor—are on government plans, and you could widen their availability in both directions (down in age and up in income) and unify the benefits.

That’s a long-term project, but it could be the next big health-care reform (in 20 years or so). Obviously, the most important priority in the next year or two is implementing the ACA and determining what’s working and what isn’t so it can be tweaked and improved. But we shouldn’t forget about what comes next.

 

By: Paul Waldman, Contributing Editor, The American Prospect, November 1, 2013

November 2, 2013 Posted by | Affordable Care Act, Medicaid, Obamacare | , , , , , , | 1 Comment

“To Secede Or Not To Secede?”: The Colorado Secession Movement Exemplifies The GOP’s Problems

If you want to understand the demographic shift in Colorado, go to the H Mart on Parker Road in Aurora on a Sunday morning before a football game. The giant Asian superstore resembles a multicultural Costco, complete with food samples of kimchi, dumplings, pickled vegetables and soymilk. The shopping cart traffic jam includes a cross-section of all ages and ethnicities, including Latinos, Africans and Korean families in Broncos jerseys.

I think it’s great. I love seeing the American mosaic and the changing American West epitomized in a grocery store. Aurora itself is the third largest city in Colorado, and Colorado’s Sixth Congressional District the most diverse in the Rocky Mountain region.

But others disagree. They feel alienated from a state that’s not what it used to be. Sixty miles away, in Colorado’s Fourth  Congressional District, a group of eleven Colorado counties are serious enough about seceding from the state that the proposal is on the ballot November 5th. As secession leader Sean Conway put it in a Bloomberg News story, “The state I love, as a third-generation Coloradan, has really left me.”

If it has, that’s his choice. And that’s exactly the problem for Colorado and national Republicans. They’re going backwards as Democrats gain votes in a new, different, more diverse state. University of Denver Political Science Professor Seth Masket explained in the Bloomberg piece, “Colorado is a perfect example of demographic change leading to political change.”

Secession leader Conway is also a friend and former Senate colleague of Fourth District Rep. Cory Gardner, a Republican. Next Tuesday, Gardner himself will have to vote on whether or not to secede from his own Congressional district since it will be on his home ballot in Yuma County. Gardner has repeatedly dodged the question from reporters about how he will vote, after initially stating in June he was sympathetic to the movement.

Meanwhile, tea party U.S. Senate candidate and Weld County District Attorney Ken Buck told the Denver Post he’s voting no.

Gardner is widely regarded as a rising star in the Republican party. He’s been mentioned as a dark horse candidate for speaker, despite only being elected three years ago as part of the 2010 Tea Party wave. He’s respected by both the tea party caucus and House leadership, but straddling those two worlds can create complications for someone who needs to be taken seriously on the Georgetown cocktail party circuit.

But the secession question, like immigration, put leadership-seeking Washington D.C.  Republican Cory Gardner at odds with Yuma County Republican Cory Gardner. It’s the same tea party internal struggle that’s tearing the Republicans apart nationally. Do you cater to a retrograde base nostalgic for a time that never was and never will be again, or do you alienate your base in the long-term interests of your party?

So which way will Gardner go, to secede or not to secede? How he votes will tell us a lot about the direction he thinks he and the Republicans are going.

 

By: Laura Chapin, U. S. News and World Report, November 1, 2013

November 2, 2013 Posted by | GOP, Secession | , , , , , | Leave a comment

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