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“U.S. Chamber Carrying The Tea Party Label”: The Tea Party and Wall Street Are Even Closer Than We Thought

Ever since the Tea Party Republicans arrived on the scene in Washington, I’ve cast a wary eye at the notion of them as grass-roots insurgents disconnected from the party’s big business and Wall Street base. Heck, when I went looking for one Tea Party tribune, Rep. Tom Graves of Georgia, the night of the August 2011 vote to resolve that summer’s debt-ceiling showdown, I found him at a fundraiser in AT&T’s box at National Stadium.

But even I, with my lack of illusions on this score, was startled to see just how tight the business lobby-Tea Party bond has been, as revealed in today’s Washington Post by Tom Hamburger and Jia Lynn Yang, with help from the Center for Responsive Politics. They report:

The American Bankers Association gave more money over the past two election cycles to GOP lawmakers who in effect voted to allow the United States to default on its debt than those who voted against that scenario. The ABA contributed $2.2 million to lawmakers who ultimately ignored the group’s warnings, second only to the Club for Growth and just ahead of Koch Industries, both of which are leading sources of funds for conservative candidates…

At financial services firms, including hedge funds and major banks, contributions totaled more than $26 million over the past two election cycles to the Republican lawmakers who voted against a deal to reopen the government and avoid a first-ever debt default. Employees and the political action committee of Goldman Sachs, which didn’t comment for this article, gave $1.06 million from 2009 to 2012 to the group of GOP lawmakers who voted against the deal. At Bank of America, which also declined to comment, contributions totaled $1.03 million. Hedge funds gave $1.7 million….

Employees and political action committees at Honeywell, the manufacturing conglomerate [whose CEO David Cote was among the Fortune 500 types warning against the shutdown] contributed nearly $2.1 million to last week’s naysayers while providing slightly less to yes-voting Republicans. At AT&T, contributions reached $1.9 million for no-voting members and $2.1 million for those voting “yes.”

Even the proud leader of the defund-Obamacare government-shutdown movement got the business lucre:

Sen. Ted Cruz (R-Tex.), whose 21-hour floor speech helped spark the crisis and who voted against the debt-ceiling deal, received $786,157 from financial services companies — more than the $705,657 he received from the Club for Growth. Cruz’s wife works at Goldman Sachs, whose PAC gave $5,000 to her husband in 2012.

The question now, of course, is whether big business and Wall Street keep shoveling money toward those in the congressional suicide caucus. There are already signs of a rethinking underway, with talk of non-lunatic business-backed challengers in Michigan and Utah, and with some donors holding off on writing the usual checks to the GOP. Still, the Post’s report reminds us that we should not be surprised if this shift is marginal at best. The fact is, Ted Cruz and his ilk were making no bones at all about what they planned to do in Washington, and got plenty of backing from supposedly sober business types nonetheless. Why? Because their interests overlap more than the new talk of a rift acknowledges, on everything from taxes to organized labor to government regulations. What was the final demand that many in the shutdown caucus were making? The elimination of a tax on some of the highest-margin companies in the country—not exactly a typical pitchfork-wielding cause. Make no mistake: The great Shutdown Debacle of 2013 may have carried the Tea Party label, but it was made in the U.S. Chamber of Commerce and the C-suite.

Addendum, 5:30 p.m. Wednesday: It’s worth noting that Ted Cruz is not just getting big financial support from Wall Street. He’s also on its health plan.

 

By: Alec MacGillis, The New Republic, October 23, 2013

October 29, 2013 Posted by | Big Business, Tea Party, Wall Street | , , , , , , | Leave a comment

“Only Division Is Over Tactics, Not Policy”: The Tea Party And Big Business Want The Same Things

Dave Weigel patiently explains today that there isn’t actually a brewing war between “the Tea Party” and Wall Street and “the business community.” There is, really, just the same fruitful alliance that birthed the Tea Party. Because as long as “the Tea Party” means “Republicans in control of the House,” that means “Democrats not in control of the House.” Which is good for business! (In a very dumb and short-sighted way, mostly.) As Weigel says: “No one’s looking to primary the average Class of 2010 Republican because he’s trying to repeal Dodd-Frank or challenge EPA rules or prevent any changes in tax law that would anger the donors.”

And “big business,” in the form of the Chamber of Commerce and other business-backed groups, has spent and will continue to spend a small fortune electing Republicans, including “Tea Party” Republicans, in order to help Republicans, including “Tea Party” Republicans, maintain control of the House and possibly take over the Senate. The shutdown and the default showdown didn’t stop that. There is still one party that is very committed to rolling back environmental and other regulations, preventing meaningful financial reform, and, most importantly, keeping taxes as low as possible on very wealthy people and corporations. The Tea Party is not opposed to any of those things.

There are really only two issues dividing “the business community” from “the Tea Party.” They are a) tactics and b) immigration. “The business community” wants the Republican Party to be competitive in national races — they’re also be fine with the Republicans trying to win elections through gerrymandering and voter suppression — while “the Tea Party” prioritizes purity over electability. (In fact most of them don’t see conservative purity as any sort of obstacle to electability, but they are wrong.) The backlash to Ted Cruz and the House “suicide caucus” was mainly a reaction to tactics, not a blow-up over policy.

Conservatives simply differed over the best way to force Democrats into accepting the roll-back of the ACA and/or a tax-cutting, social insurance-cutting long-term budget deal. Plenty of “establishment” Republicans still believe it is perfectly appropriate to use the debt ceiling, and the implicit threat of default, to extract policy concessions. Where Republicans split was on the wisdom of actually shutting the government down or merely threatening to, and on what precisely to demand in exchange for reopening the government. Grover Norquist attacked Ted Cruz for demanding the unachievable, but he doesn’t actually oppose defunding Obamacare. He just thought Paul Ryan had a better strategy for actually winning concessions. (Grover Norquist is right, by the way.)

Where there could actually be a break of some kind is in next year’s primaries, when Tea Party groups will fund some less-electable candidates against perfectly conservative members with more realistic grasps of the achievable. But if the Tea Party groups win those primaries, big business will still support their candidates. (The Chamber of Commerce donated to Mike Lee and Allen West in 2012.)

The biggest problem with the moderate fantasy of a new Moderate Republican rising from the ashes of Ted Cruz is that “big business” isn’t going to force the “Tea Party” to moderate its positions, it’s going to fight to get them to fight for their positions more effectively.  People opposed to the goals of the Tea Party movement should be even more opposed of the business community reasserting control over the party. The end result of the “grown-ups” stepping in to squash the Tea Party would be more power to people like… Mitch McConnell, the man who’s done more than anyone else to block Barack Obama’s agenda. The actual policies being fought for, with few exceptions, wouldn’t change.

The one major issue where there is actually tension between the bottom-line priorities of the donor class and the desires of the activist movement is immigration. There are many obvious reasons why big business would prefer looser immigration restrictions, more guest-workers and visas for “highly skilled” immigrants. But for a popular movement still fueled by the tribal panic of aging whites, “more immigrants” is not a winning message. (It’s also true that “the donor class” is much more socially liberal than the grassroots activists, but same-sex marriage isn’t enough of a profit-booster to make it a fight worth having outside the “blue states” where it’s already popular.) Even on immigration, smart representatives of the donor class seem to be suggesting that they believe it’s better to let activist conservatives have their way than to create a genuine split in the party. Because what’s good for Republicans is good for rich people.

That will still be true  in 2014 and in 2016. And that’s why when the next presidential election rolls around, the conservative grassroots and the money will fall in line behind whichever guy the GOP nominates, even if they disagree about him at first.

 

By: Alex Pareene, Salon, October 21, 2013

October 22, 2013 Posted by | Big Business, Tea Party | , , , , , , , | Leave a comment

“Cloaked In Secrecy”: The Myth Of The Medical-Device Tax

In the last few days of negotiations in Congress, repeal of the Affordable Care Act’s tax on medical devices emerged as a key Republican demand. The medical-device industry waged an intense lobbying campaign — even garnering the support of many Democrats who favored the law — arguing that the tax would stifle innovation and increase health care costs.

This argument is doubly disingenuous. Not only can the medical-device industry easily afford the tax without compromising innovation, but the industry’s enormous profits are a result of anticompetitive practices that themselves drive up medical-device costs unnecessarily. The tax is a distraction from reforms to the industry that are urgently needed to lower health care costs.

The medical-device industry faces virtually no price competition. Because of confidentiality agreements that manufacturers require hospitals to sign, the prices of the devices are cloaked in secrecy. This lack of transparency impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.

Even worse, manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest. Physicians often don’t even know the costs of the devices, and individual physicians often choose devices on their own, which weakens a hospital’s ability to bargain for volume discounts.

Such anticompetitive practices help generate a wide variation in the prices of medical devices — and contribute to higher prices in general. For example, the Government Accountability Office found that prices for cardiac implantable medical devices in the United States vary by several thousand dollars. And even the lowest-priced devices in the United States are expensive compared with those in other developed countries. According to the consulting firm McKinsey & Company, the United States spends about 50 percent more than expected on the top five medical devices, compared with Europe and Japan. McKinsey calculates that this amounts to $26 billion in excessive spending each year. Medicare, private health insurers and patients end up paying these inflated prices.

Excessive prices fuel enormous profits — profits that dwarf both the medical-device tax and the industry’s investments in research and development. Consider the device division of Johnson & Johnson, which in 2012 had an operating profit of $7.2 billion. By the company’s own estimate, the device tax would amount to at most $300 million, and its investment in research and development amounts to only $1.7 billion.

There are several ways policy makers could lower device costs. The first step would be to end the anticompetitive practices that prevent hospitals from getting the best deals. Senator Charles E. Grassley, Republican of Iowa, has sponsored legislation that would foster transparency by posting online price information for implantable medical devices.

In addition, instead of simply paying hospitals based in part on what they have spent on devices, Medicare should force manufacturers to compete for business based on a product’s price and quality.

Medicare should also pay hospitals a single lump sum for all of the associated costs of a given procedure (like a hip replacement). This approach, known as “bundling” the costs, would create incentives for hospitals to lower device costs. Savings should be shared with the physicians, so that their incentives are aligned with the hospital’s.

Bundling has been used successfully in pilot programs. Under Medicare’s Acute Care Episode Program — which bundled payments for cardiac and orthopedic procedures — physicians worked together to choose high-quality, cost-effective devices. Baptist Health System in Texas, which participated in the program, used clinical evidence to choose devices and negotiated lower prices for both Medicare and non-Medicare patients.

States could adopt similar payment reforms for private insurance and their Medicaid programs. In Arkansas, the Medicaid program and private payers — including Walmart — have collaborated to adopt bundled payments for several procedures, including hip and knee replacements.

To complement these efforts, the new Patient-Centered Outcomes Research Institute, a nongovernmental body created by the Affordable Care Act, should pay for research that compares the effectiveness of devices so physicians can make informed choices. (Three years into its existence, the institute has initiated few, if any, studies of medical devices.) Medicare or the Food and Drug Administration should also require the use of registries that track when devices fail.

Currently, medical-device manufacturers allocate only a sliver of profits to research and development and often focus on “tweaks” to existing devices, without providing any evidence that they are of better quality. Competitive pressures from public and private payers would provide incentives for the industry to become more innovative, producing technologies that actually lowered costs and offered truly advanced breakthroughs.

Instead of using its clout to lobby against the device tax — which helped foment opposition to the Affordable Care Act — the medical-device industry needs to share the responsibility of lowering costs for patients, businesses and taxpayers.

 

By: Topher Spiro, Op-Ed Contributor, The New York Times, October 16, 2013

October 17, 2013 Posted by | Big Business, Health Care Costs | , , , , , , , | 1 Comment

“The Monster They Created”: Can Corporate America Break The Republican Radical Right?

Back in the early 1970s, corporate America got together and developed a plan of action to combat the takeover of America by what they saw as an unremittingly radical left. If we don’t act and get politically engaged, these corporate titans said, this country is going down the chute.

Forty years later, corporate America beholds the monster it created. And now, these same institutions need to step up and rein in an unremittingly radical right. Only they can stop this nonsense, and it will take an effort as concerted and well-organized as the one they undertook in the 70s.

Here’s what happened then. In the 1960s and early 70s, a good chunk of America’s corporate elite really did feel that the free-enterprise system was under threat. In 1971, the U.S. Chamber of Commerce asked Lewis Powell, then a corporate lawyer in Richmond who would soon be nominated to the Supreme Court by Richard Nixon, to tell them how to save America. The result was the famous Powell memo, which urged the Chamber to start fighting back to protect the system before it was too late in the following arenas: on college campuses; in the media; in the courts; at stockholder and shareholder meetings; and in the political realm.

There’s been a lot of interesting debate over the years about how important the Powell memo really was. But whatever centrality one accords it, the fact is that it was right around then that conservatism really started to organize itself politically. The major think tanks got off the ground (Heritage in 1973), or, in other cases like the American Enterprise Institute, were transformed into something much more overtly political. Several media-monitoring outfits were started (Google the name Reed Irvine, if you weren’t around in those days). Groups were created to train young conservatives and fund right-wing campus newspapers. By 1980, they helped elect a president, feed him appointees and judicial nominees (the Federalist Society started in 1982), and create much of his policy agenda. Today, this organized right-wing infrastructure spends more than $300 million a year on politics.

But now, as we’re seeing, the corporatists’ biggest problem isn’t the left. It’s the right—the nativist and ideological right that no longer wants to listen to them. It was encouraging last week to see officials from the Chamber, the National Retail Federation, and other organizations vent their frustrations to the New York Times and vow that they are going to get involved in Republican primaries to try to defeat some crazies.

And it’s great to hear Tom Donohue, the head of the chamber, say things like these remarks, which he recently made on C-SPAN: “You’ve got to go into the primaries not just to affect this race or that but to send a message on who we are and what we believe. We want to get a better result for the American people and get people there who give the arguments a fair shake.” His ultimate goal, said Donohue, is a “more governable Republican Party.”

Hallelujah to that. But the Chamber and the others are going to have to put lots of money behind this. And they’re going to have to dig in for lengthy trench warfare. Can they reach, and energize, the half of the GOP electorate that isn’t driven by resentment? The half that’s conservative, which is fine, but not boiling over with rage? The half that would accept and embrace an immigration-reform bill and investments in infrastructure, as the Chamber does, even though Barack Obama wants them, too?

This is the biggest political issue of our time. Others are close—the corrupt hold of money on our system is admittedly a pretty close second. But this is the biggest one, because a reasonable GOP would make the country governable again. A critical mass of conservative compromisers, with maybe a few genuinely moderate Republicans thrown in, would end this dysfunction more quickly than anything else.

And the only way for that to happen is for Republican officeholders to fear that segment of the GOP electorate more than they fear the radical segment. That’s going to take a long time and lot of money and organization. But we do know from polls that those Republican voters exist. They’re just intimidated right now.

But to lead this fight, the Chamber needs to see it in just the historical terms I’ve laid out. It’s 1971 all over again. Who is the Lewis Powell who will save corporate America from the rage machine it helped create?

 

By: Michael Tomasky, The Daily Beast, October 14, 2013

October 15, 2013 Posted by | Big Business, Corporations, U.S. Chamber of Commerce | , , , , , , | Leave a comment

“Risky Business”: Corporate Leaders Bemoan Tea Party Default Crisis Created By Their Own Donations

America’s great minds of business and finance have reached a consensus on the government shutdown and worse, the prospect of a debt default: While the latter is worse, both are bad. Those same great minds are well aware how the shutdown came to pass and why default still looms on the horizon, whether next week, next month, or next year.

Yes, the frightened corporate leaders surely know how this happened — because their money funded the Tea Party candidates and organizations responsible for the crisis.

Consider Rep. Ted Yoho (R-FL), a Tea Party freshman whose outspoken stupidity on a default’s potential benefits, such as an improved U.S. credit rating, has provided a bit of dark humor in these dark days. Yoho, a large-animal veterinarian, announced months ago that he would never vote to raise the debt ceiling.

Like most Republican candidates, he had no problem raising contributions from business interests, notably including contractors, insurance companies, manufacturers and agricultural processors — all of which presumably share the horror of default expressed by the U.S. Chamber of Commerce. But no doubt Yoho parroted the usual right-wing clichés about taxes, regulation, labor, and health care, so all the business guys wrote a check without caring that Yoho is an ignorant yobbo.

Or consider Rep. Marlin Stutzman (R-IN), who came to embody the idiocy of the shutdown when he declared “we’re not going to be disrespected” by the White House, but couldn’t articulate precisely what Republicans needed in order to reopen the government and avoid default.  Another low-wattage Tea Party newcomer, Stutzman likewise raised plenty of money from commercial banks, real estate firms, insurance companies, and various manufacturers. Why do these executives write checks to elect someone like him?

Then there are the Tea Party leaders in the upper chamber, including such adornments of democracy as Sen. Ron Johnson (R-WI) and of course Sen. Ted Cruz (R-TX). Johnson says there need be no debt default, no matter what Congress does, while Cruz, the “Defund Obamacare” mastermind, is more culpable than any other single legislator for the paralysis gripping Washington and the country. Johnson’s top donors include an investment firm called Fiduciary Management, Inc., ironically enough, as well as Northwestern Mutual, Blue Cross/Blue Shield, Mass Mutual Life Insurance, and naturally, Koch Industries (which now claims, disingenuously, that it doesn’t favor the Cruz shutdown strategy or a debt default).

As for Cruz, guess who paid for his campaign? Very close to the top of the list of donors for the despised Texan is none other than Goldman Sachs — whose chairman Lloyd Blankfein showed up at the White House a few days ago to bemoan the catastrophic threat of default. Not only did Blankfein and his fellow bankers warn of what might happen if America breaches its full faith and credit, but he even hinted that the fault lies with Republican hostage takers. Which is only partially right, because Blankfein and his fellow financiers need to look in the mirror, too. Cruz also got a big check from Berkshire Hathaway, corporate home of the venerated Wall Street sage Warren Buffett, who just compared the impact of default to “a nuclear bomb.” If that nuke wipes out the markets, Berkshire’s investment in Cruz will have lit the fuse.

If any of these business leaders honestly cared about fiscal responsibility and economic growth – let alone the constant threat of shutdowns and defaults – they could step up to warn the Republicans that the money won’t be there anymore unless they cease and desist from such assaults on democracy. They have more than enough money and power to end this crisis – and make sure it never happens again – but they seem to lack the necessary character and courage.

 

By: Joe Conason, Featured Post, The National Memo, October 11, 2013

October 14, 2013 Posted by | Big Business, Default, Government Shut Down | , , , , , , | Leave a comment

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