“Paying Back Campaign Donors”: Whose Presidential Campaign Will Your Pension Finance?
Wall Street is one of the biggest sources of funding for presidential campaigns, and many of the Republican Party’s potential 2016 contenders are governors, from Chris Christie of New Jersey and Rick Perry of Texas to Bobby Jindal of Louisiana and Scott Walker of Wisconsin. And so, last week, the GOP filed a federal lawsuit aimed at overturning the pay-to-play law that bars those governors from raising campaign money from Wall Street executives who manage their states’ pension funds.
In the case, New York and Tennessee’s Republican parties are represented by two former Bush administration officials, one of whose firms just won the Supreme Court case invalidating campaign contribution limits on large donors. In their complaint, the parties argue that people managing state pension money have a First Amendment right to make large donations to state officials who award those lucrative money management contracts.
With the $3 trillion public pension system controlled by elected officials now generating billions of dollars worth of annual management fees for Wall Street, Securities and Exchange Commission (SEC) regulators originally passed the rule to make sure retirees’ money wasn’t being handed out based on politicians’ desire to pay back their campaign donors.
“Elected officials who allow political contributions to play a role in the management of these assets and who use these assets to reward contributors violate the public trust,” says the preamble of the rule, which restricts not only campaign donations directly to state officials, but also contributions to political parties.
In the complaint aiming to overturn that rule, the GOP plaintiffs argue that the SEC does not have the campaign finance expertise to properly enforce the rule. The complaint further argues that the rule itself creates an “impermissible choice” between “exercising a First Amendment right and retaining the ability to engage in professional activities.” The existing rule could limit governors’ ability to raise money from Wall Street in any presidential race.
In an interview with Bloomberg Businessweek, a spokesman for one of the Republican plaintiffs suggested that in order to compete for campaign resources, his party’s elected officials need to be able to raise money from the Wall Street managers who receive contracts from those officials.
“We see (the current SEC rule) as something that has been a great detriment to our ability to help out candidates,” said Jason Weingarten of the Republican Party of New York—the state whose pay-to-play pension scandal in 2010 originally prompted the SEC rule.
The suit comes only a few weeks after the SEC issued its first fines under the rule—against a firm whose executives made campaign donations to Pennsylvania Gov. Tom Corbett, a Republican, and Philadelphia Mayor Michael Nutter, a Democrat. The company in question was managing Pennsylvania and Philadelphia pension money. In a statement on that case, the SEC promised more enforcement of the pay-to-play rule in the future.
“We will use all available enforcement tools to ensure that public pension funds are protected from any potential corrupting influences,” said Andrew Ceresney, director of the SEC Enforcement Division. “As we have done with broker-dealers, we will hold investment advisers strictly liable for pay-to-play violations.”
The GOP lawsuit aims to stop that promise from becoming a reality. In predicating that suit on a First Amendment argument, those Republicans are forwarding a disturbing legal theory: Essentially, they are arguing that Wall Street has a constitutional right to influence politicians and the investment decisions those politicians make on behalf of pensioners.
If that theory is upheld by the courts, it will no doubt help Republican presidential candidates raise lots of financial-industry cash—but it could also mean that public pension contracts will now be for sale to the highest bidder.
By: David Sirota, Senior Editor, In These Times, August 15, 2014
“A Conversion On Political Rhetoric”: The Fascinating Political Evolution Of Paul Ryan
Paul Ryan’s new book The Way Forward is meant to be bought, not read.
You buy a book like this because you’re in a conservative book club, or you’re a big Paul Ryan fan, and you feel obliged. It’s like voting, but it costs money. Publishers commission these books hoping to get a big payoff if and when the author is nominated for president and suddenly a much larger share of the country feels obliged to vote, er, buy Ryan.
But there’s more to The Way Forward than that, largely because Ryan is an increasingly important and intriguing figure in Republican politics. His persona evolves — often, it seems — in tandem with the felt-needs of the GOP. Ryan has always been a little further to the right than the average elected Republican. But that didn’t stop him from corralling votes for Medicare Part-D when George W. Bush needed them. Then when the GOP constituents needed someone who looked good under a green eyeshade, he became a much sterner budget watcher, and strenuous fiscal conservative.
The first half of the Ryan book is a biography as starched and colorless as his collars. But the second half of The Way Forward is fascinating. It gives a view of what Ryan wants to be now and over the next two years, possibly as he contemplates a run for the presidency. And make no mistake: Ryan is transformed.
No longer is Paul Ryan the P90X-ripping, budget-slashing devotee of Ayn Rand that Democrats gleefully caricatured as someone who wanted to push grandma off a cliff. Today he’s the geeky white guy dancing badly at a black church, and then biting his lip and nodding to signal how much he is listening, and learning. He’s putting in an effort to expand his horizons personally. He is undergoing a political conversion, or at least a conversion on political rhetoric.
Quite literally, Paul Ryan experiences a kind of Come-To-Frank-Luntz moment when someone asks him who he is talking about when he refers to some people as “takers.” Ryan had in the past adopted the language of “makers and takers” to describe people who are paying more in taxes than they receive in benefits, and people who are receiving more benefits than what they pay. Ryan says this language was just in the air at the time he adopted it. And it was. A Nation of Takers was the scorching title to a sobering (and sober) book by Nicholas Eberstadt about the shape of America’s entitlement state. Eberstadt’s book is exactly the kind of doomsday look into the spreadsheets that Ryan was getting into then.
Today, Ryan won’t disavow the math, exactly, but he has discarded the implied insult he attached to it.
[W]hile the problem it depicts is real and worrisome, the phrase “makers and takers” communicated a lot more than just the dilemma I was trying to describe. That day at the fair was the first time I really heard the way it sounded. As I stood there, listening to the guy from the Democrats’ tent lay into me, I thought, “Holy cow. He’s right.” [The Way Forward]
Ryan also talks about his experiences of reaching out to constituencies where there aren’t many Republicans. In what is probably the most substantive political point in the book, Ryan says what many already suspect, that the 2012 election proved that “focusing heavily on simply turning out our traditional coalition is a losing strategy.”
Ryan does what a politician in this position should do — he takes his lumps just by showing up for constituent events among people who are not naturally aligned to him. Black constituents often tell him to his face that they disagree with him. “[A]t least they were telling me, personally, instead of just some pollster canvassing the neighborhood,” he writes. He says that these events communicate that a person who has conservative politics can still care enough to show up and talk to minority constituents.
This is the right thing politically, but it’s also the right thing to do, period. The GOP should follow Ryan’s example. It would be good for the country. Citizens deserve the competition for their votes that gerrymandering and polarization deny. No major party should effectively ignore an entire demographic or geographic group of Americans.
Now, there are no great revelations in this book. It’s filled with easy-to-understand anecdotes about the malfunctioning of the health-care system before and after ObamaCare, and the efficiency of market-oriented solutions. These will be repeated many, many times by Ryan in the medium-term of his political life.
Ryan also repeats Jack Kemp’s name over and over again, almost as much as he does Reagan’s. Kemp was a Republican who worked hard to make GOP principles appealing to urban and minority voters. He was HUD secretary under George H.W. Bush and Bob Dole’s vice presidential candidate. Kemp is an odd figure, combining the supply-side politics of a Dan Quayle with the social idealism of a George Romney. He referred to himself as a “bleeding-heart conservative.”
And a bleeding-heart conservative sounds great in theory. In a way, it’s what George W. Bush attempted with his “compassionate conservative” brand. But Kemp was never really a national figure, and his unique policy ideas never really got purchase among their supposed beneficiaries. He was admired more than followed. He made Republicans feel better about themselves, without winning great victories. Maybe the time is ripe for a return to Kempism. But I have my doubts.
By: Michael Brendan Dougherty, The Week, August 21, 2014
“McConnell’s Genius Pitch”: Vote GOP, Get Another Shutdown
Senate Minority Leader Mitch McConnell (R-KY) is often hailed as one of Washington’s most tactically cunning politicians, and for the most part it’s true. But McConnell does have a serious political flaw: His tendency to actually tell the truth about those tactics.
Senator McConnell did it again in an interview with Politico, published on Wednesday. Previewing a Republican-controlled Senate, McConnell made it clear that he plans to escalate congressional confrontation with the president, potentially leading to another government shutdown:
In an extensive interview here, the typically reserved McConnell laid out his clearest thinking yet of how he would lead the Senate if Republicans gain control of the chamber. The emerging strategy: Attach riders to spending bills that would limit Obama policies on everything from the environment to health care, consider using an arcane budget tactic to circumvent Democratic filibusters and force the president to “move to the center” if he wants to get any new legislation through Congress.
In short, it’s a recipe for a confrontational end to the Obama presidency.
“We’re going to pass spending bills, and they’re going to have a lot of restrictions on the activities of the bureaucracy,” McConnell said in an interview aboard his campaign bus traveling through Western Kentucky coal country. “That’s something he won’t like, but that will be done. I guarantee it.”
When asked if this strategy could force a government shutdown, McConnell “said it would be up to the president to decide whether to veto spending bills that would keep the government open.”
“He could,” McConnell later said of the probability that President Obama would veto must-pass appropriation bills that are loaded with riders to undo policies that the White House supports. “Yeah, he could.”
It’s difficult to overstate what a horrible idea this is. Although some Republicans may not have noticed it, the last government shutdown was a debacle. The GOP’s hopeless effort to blackmail President Obama into defunding the Affordable Care Act failed miserably, wasting $24 billion and dragging Republicans’ poll numbers into the sewer along the way.
The poll numbers haven’t really recovered, but the combination of President Obama’s own political struggles and a very favorable electoral map still have them set up to make gains in 2014. In fact, Republicans have a good chance of winning the Senate. But promising to ramp up the brinksmanship that caused the last shutdown gives Democrats their best argument for why voters should deny Republicans full control of Congress.
Democrats recognize this, of course; numerous party leaders have already turned McConnell’s remarks against him, and they are certain to resurface in Democratic campaign pitches from now until November. Alison Lundergan Grimes, the Democrat giving McConnell the fight of his career in Kentucky’s Senate race, surely appreciates the minority leader’s Kinsley gaffe most of all.
If Republicans do manage to win the majority and follow through on McConnell’s threat, it would virtually guarantee that they don’t hold control for long. The 2016 Senate map is as favorable to Democrats as this year’s is to the GOP. It will be difficult enough for Republicans to hold on to seats in blue states like Florida, Illinois, New Hampshire, Pennsylvania, and Wisconsin; if they spend the next two years threatening vital services for the sole purpose of making a hopeless ideological stand, it will be nearly impossible.
By: Henry Decker, The National Memo, August 21, 2014
“The 2014 Midterms Do Matter”: McConnell Eyes More Shutdowns Following GOP Gains
It’s tempting to think the 2014 midterms may not matter much. Assuming Republicans keep their House majority, which seems very likely, the legislative process in 2015 and 2016 will probably look an awful lot like the legislative process since 2011 – congressional inaction. GOP lawmakers will continue to reject compromises and negotiations no matter who controls the upper chamber.
As this line of thought goes, the part that enjoys the Senate majority will have the power to watch the other party filibuster, and little more.
But there’s a flaw in these assumptions: if rewarded by voters with their first Senate majority in a decade, Republicans don’t intend to use their new-found congressional power to just spin their wheels. Manu Raju reports today that GOP leaders have a very different kind of plan in mind.
Mitch McConnell has a game plan to confront President Barack Obama with a stark choice next year: Accept bills reining in the administration’s policies or risk a government shutdown.
In an extensive interview here, the typically reserved McConnell laid out his clearest thinking yet of how he would lead the Senate if Republicans gain control of the chamber. The emerging strategy: Attach riders to spending bills that would limit Obama policies on everything from the environment to health care, consider using an arcane budget tactic to circumvent Democratic filibusters and force the president to “move to the center” if he wants to get any new legislation through Congress.
In short, it’s a recipe for a confrontational end to the Obama presidency.
McConnell told Politico, “We’re going to pass spending bills, and they’re going to have a lot of restrictions on the activities of the bureaucracy. That’s something [President Obama] won’t like, but that will be done. I guarantee it.”
There’s no reason to think this is campaign-season bluster. McConnell is more than comfortable making demonstrably false claims about public policy and his partisan rivals, but when it comes to process and legislative strategy, the Kentucky Republican is one of Capitol Hill’s most candid officials.
The result, however, is a curious pitch: just 76 days before this year’s midterm elections, the Senate’s top GOP leader wants the voting public to know that a vote for Republicans is a vote for government shutdowns.
Indeed, McConnell isn’t even being subtle about it. If his party is rewarded by voters in the fall, GOP senators, working with a Republican House majority, will add measures to spending bills that undo the progress of the last several years. If the White House refuses to go along, Republicans will simply shut down the government – yes, again – until the president gives the new GOP majority what it wants.
In other words, the 2014 midterms do matter. As ridiculous as Congress has become of late, McConnell has mapped out a deliberate strategy to make things considerably worse. The question isn’t whether he’ll follow through on his threats; the question is whether voters will empower him to do so.
Update: I should add that McConnell’s strategy is an interesting departure from four years ago, when GOP leaders suggested that they’d still govern if Republicans took the House majority. At the time, some pundits even believed them. Now, however, McConnell isn’t even bothering with the pretense.
By: Steve Benen, The Maddow Blog, August 20, 2014
“The Disease Of American Democracy”: The Monied Interests Are Doing What They Do Best – Making Money
Americans are sick of politics. Only 13 percent approve of the job Congress is doing, a near record low. The President’s approval ratings are also in the basement.
A large portion of the public doesn’t even bother voting. Only 57.5 percent of eligible voters cast their ballots in the 2012 presidential election.
Put simply, most Americans feel powerless, and assume the political game is fixed. So why bother?
A new study scheduled to be published in this fall by Princeton’s Martin Gilens and Northwestern University’s Benjamin Page confirms our worst suspicions.
Gilens and Page analyzed 1,799 policy issues in detail, determining the relative influence on them of economic elites, business groups, mass-based interest groups, and average citizens.
Their conclusion: “The preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”
Instead, lawmakers respond to the policy demands of wealthy individuals and monied business interests – those with the most lobbying prowess and deepest pockets to bankroll campaigns.
Before you’re tempted to say “duh,” wait a moment. Gilens’ and Page’s data come from the period 1981 to 2002. This was before the Supreme Court opened the floodgates to big money in “Citizens United,” prior to SuperPACs, and before the Wall Street bailout.
So it’s likely to be even worse now.
But did the average citizen ever have much power? The eminent journalist and commentator Walter Lippman argued in his 1922 book “Public Opinion” that the broad public didn’t know or care about public policy. Its consent was “manufactured” by an elite that manipulated it. “It is no longer possible … to believe in the original dogma of democracy,” Lippman concluded.
Yet American democracy seemed robust compared to other nations that in the first half of the twentieth century succumbed to communism or totalitarianism.
Political scientists after World War II hypothesized that even though the voices of individual Americans counted for little, most people belonged to a variety of interest groups and membership organizations – clubs, associations, political parties, unions – to which politicians were responsive.
“Interest-group pluralism,” as it was called, thereby channeled the views of individual citizens, and made American democracy function.
What’s more, the political power of big corporations and Wall Street was offset by the power of labor unions, farm cooperatives, retailers, and smaller banks.
Economist John Kenneth Galbraith approvingly dubbed it “countervailing power.” These alternative power centers ensured that America’s vast middle and working classes received a significant share of the gains from economic growth.
Starting in 1980, something profoundly changed. It wasn’t just that big corporations and wealthy individuals became more politically potent, as Gilens and Page document. It was also that other interest groups began to wither.
Grass-roots membership organizations shrank because Americans had less time for them. As wages stagnated, most people had to devote more time to work in order to makes ends meet. That included the time of wives and mothers who began streaming into the paid workforce to prop up family incomes.
At the same time, union membership plunged because corporations began sending jobs abroad and fighting attempts to unionize. (Ronald Reagan helped legitimized these moves when he fired striking air traffic controllers.)
Other centers of countervailing power – retailers, farm cooperatives, and local and regional banks – also lost ground to national discount chains, big agribusiness, and Wall Street. Deregulation sealed their fates.
Meanwhile, political parties stopped representing the views of most constituents. As the costs of campaigns escalated, parties morphing from state and local membership organizations into national fund-raising machines.
We entered a vicious cycle in which political power became more concentrated in monied interests that used the power to their advantage – getting tax cuts, expanding tax loopholes, benefiting from corporate welfare and free-trade agreements, slicing safety nets, enacting anti-union legislation, and reducing public investments.
These moves further concentrated economic gains at the top, while leaving out most of the rest of America.
No wonder Americans feel powerless. No surprise we’re sick of politics, and many of us aren’t even voting.
But if we give up on politics, we’re done for. Powerlessness is a self-fulfilling prophesy.
The only way back toward a democracy and economy that work for the majority is for most of us to get politically active once again, becoming organized and mobilized.
We have to establish a new countervailing power.
The monied interests are doing what they do best – making money. The rest of us need to do what we can do best – use our voices, our vigor, and our votes.
By: Robert Reich, The Robert Reich Blog, August 18, 2014
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