“Those Bad Things Are Gone Now”: How The Supreme Court Is About To Explode America’s Racial Wealth Gap
When discussing race, the conservative argument is best expressed by the famous words of Chief Justice John Roberts: “The best way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Translation: America has done bad things in its history, but those bad things are gone now, so we should move past those horrors and look forward.
Conservatives believe that if blacks and Latinos simply work hard, get a good education and earn a good income, historical racial wealth gaps will disappear. The problem is that this sentiment ignores the ways that race continues to affect Americans today. A new report from Demos and Brandeis University, “The Racial Wealth Gap: Why Policy Matters,” makes this point strongly. The report shows that focusing on education alone will do little to reduce racial wealth gaps for households at the median, and that the Supreme Court, through upcoming decisions, could soon make the wealth gap explode.
Wealth is the whole of an individual’s accumulated assets, not the amount of money they make each year. As such, in his recent book, “The Son Also Rises,” Gregory Clark finds that the residual benefits of wealth remain for 10 to 15 generations. To understand why that matters, consider the fact that Loretta Lynch, Obama’s recent nomination for U.S. attorney general, is the great-great-granddaughter of a slave who escaped to freedom. (That’s four generations). Consider also that most people on Social Security today went to segregated schools. (That’s two generations.) If Clark is correct in his thesis, then the impacts of wealth built on the foundations of American slavery and segregation will continue to affect Lynch’s great-great-great grandchildren.
It is therefore unsurprising that addressing just one aspect of this disparity cannot solve racial wealth gaps. Demos/Brandeis find that equalizing graduation rates would reduce the wealth gap between blacks and whites by 1 percent, and between Latinos and whites by 3 percent at the median. Equalizing the distribution of income would only reduce the wealth gap by 11 percent for blacks and 9 percent for Latinos. Part of the durability of wealth gaps is the disproportionate benefits that whites still enjoy: They face less job market discrimination and are more likely to reap a big inheritance, for example. This means that the returns to education and income are generally higher for whites. But even after controlling for these returns, income and education can’t explain the entire wealth gap.
Because America’s primary vehicle for wealth accumulation is our homes, much of the explanation of the racial wealth gap lies in unequal homeownership rates. According to the Brandeis/Demos analysis, equalizing homeownership would reduce the racial wealth gap by 31 percent for blacks and 28 percent for Latinos. This effect is muted because centuries of discrimination—including racial exclusion from neighborhoods where home values appreciate, redlining, and discriminatory lending practices—mean that people of color are segregated into relatively poor neighborhoods. Indeed, in 1969, civil rights activist John Lewis bought a three-bedroom house for $35,000 in Venetian Hills, Atlanta. He and his wife were the first black family in the middle-class neighborhood. In his book, “Walking with the Wind,” he notes that, “within two years… the white owners began moving out.” Had the value of his house simply kept up with inflation, it would be worth $222,881 today. But Zillow shows that three-bedroom houses in Venetian Hills, Atlanta, are currently selling for around $65,000 to $100,000.
Systematic disinvestment in communities of color means that even when blacks and Latinos own their homes, they are worth far less than white homes. In addition, blacks and Latinos are targets of shady lending. They are more likely to be offered a subprime loan even if they are qualified to receive a better rate. In the wake of the financial crisis, big banks like Blackstone scooped up foreclosed homes and are now offering them to people of color to rent, further pulling wealth out of these communities to benefit rich whites.
The financial crisis had a disparate impact on people of color. A Center for Responsible Lending report examined the loans originated during the subprime boom (2005 to 2008), and found that blacks and Latinos were almost twice as likely to have foreclosed during the crisis. The New York Times reported that Wells Fargo “saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania.” They discovered that loan officers “pushed customers who could have qualified for prime loans into subprime mortgages” and “stated in an affidavit… that employees had referred to blacks as ‘mud people’ and to subprime lending as ‘ghetto loans.’”
These problems are troubling, but, as unlikely as it seems, things are about to get even worse. The Supreme Court is set to decide Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, a landmark case challenging the disparate impact test, which allows a practice to be considered discriminatory if it disproportionately and negatively impacts communities of color, even if a discriminatory intent can’t be proven.
The case involves an excellent example of why disparate impact is so important: Nearly all of the tax credits that the Texas Department of Housing and Community Affairs had approved were in predominantly non-white neighborhoods. At the same time, the department disproportionately denied the claims in white neighborhoods. A federal judge decided that regardless of racial intent, the result had a “disparate impact” and increased neighborhood segregation. As Nikole Hannah-Jones has extensively documented, disparate impact has been crucial in holding banks accountable. For instance, the Justice Department used it to settle with Bank of America for $335 million after it was discovered that a mortgage company purchased by BofA had been pushing blacks and Latinos into subprime loans when a similar white borrower would have qualified for a prime loan. Because there was no official policy that required blacks and Latinos to get worse loans, the case would not have been won but for the disparate-impact statute.
The Supreme Court has already decimated the Voting Rights Act, opening the door for onerous restrictions on voting. They upheld a law banning affirmative action at state universities and have already crushed integration efforts at K-12 schools. Worryingly, as Demos Senior Fellow Ian Haney López told ProPublica, “It is unusual for the Court to agree to hear a case when the law is clearly settled. It’s even more unusual to agree to hear the issue three years in a row.” Given the importance of neighborhood poverty to upward mobility and wealth building, this case had the potential to be the most destructive, dramatically curtailing opportunity and making the wealth gap into a chasm. As Patrick Sharkey notes, “Neighborhood poverty alone accounts for a greater portion of the black-white downward mobility gap than the effects of parental education, occupation, labor force participation, and a range of other family characteristics combined.”
Demos and Brandeis suggest policies to boost homeownership, like better enforcement of anti-discrimination laws, lowering the cap on the mortgage interest deduction so blacks and Latinos can benefit and authorizing Fannie Mae and Freddie Mac to allow homeowners to modify their loans. In addition, America needs to systematically invest in poor neighborhoods. Equalizing public school education funds for poor and nonwhite schools would increase home prices in poor neighborhoods. In addition, a baby bond program would directly reduce wealth gaps by giving children money that could be used for a down payment on a house or an investment in their education. What’s clear is that we cannot simply hope that wealth gaps will disappear. These gaps were created by racially biased federal policies and need to be remedied by public policy as well. Government created the white middle class in the 1950s; now it’s time to create a black and Latino middle class. The Supreme Court, with its supposedly race-neutral philosophy, will only make it more difficult to close racial wealth gaps.
By: Catherine Ruetschlin, a Senior Policy Analyst at Demos & Sean McElwee, Research Assistant at Demo: Salon, March 14, 2015
“The GOP Gang Of Supremes Go After Obamacare”: This Lawsuit Was A Fraud From The Get-Go
Look out — the Supreme Court’s black-robed gang of far-right ideologues is rampaging again! The five-man clan is firing potshots at Obamacare — and their political recklessness endangers justice, the Court’s own integrity, and the health of millions of innocent bystanders.
In an attempt to override the law, these so-called “justices” have jumped on a wagonload of legalistic BS named King v. Burwell. But that case is a very rickety legal vehicle. It sprang from a frivolous lawsuit concocted in 2010 by a right-wing front group funded by such self-serving oligarchs as the Koch brothers, Big Oil, Big Tobacco and Big Pharma. The chairman of the front group was neither delicate nor discreet in describing the purpose of the lawsuit as a raw political assault on Obamacare: “This bastard has to be killed as a matter of political hygiene,” he howled at the time. “I do not care how this is done, whether it’s dismembered, whether we drive a stake through its heart … I don’t care who does it, whether it’s some court someplace or the United States Congress.”
So much for the intellectual depth of the King case, which was fabricated on a twisted interpretation of only four words in the 906-page health care law. The plaintiffs claim that the law prohibits insurance subsidies to the millions of low- and middle-income Americans living in the 36 states that did not set up a state exchange — thus making health care unaffordable to millions of hard-working Americans and small businesses who are purchasing insurance on the federal exchange—essentially nullifying the heart of Obamacare.
Both the district and appeals courts rejected that perverse ideological tommyrot, and even the nation’s largest health care provider called the claim “absurd.” Nonetheless, the gang of Supremes grabbed the case as a chance to wreak their own brand of ideological havoc on a law they personally dislike.
By taking over this case, these Republican judges have openly become partisans, thrusting the Supreme Court itself into the forefront of the GOP’s war against Obamacare — and against Obama himself.
While we know that an anti-government group funded by plutocratic corporate powers is behind the lawsuit intended to terminate Obamacare — who are the four people who are out front as the actual plaintiffs in the case?
The Competitive Enterprise Institute is the corporate front, but it had no standing to sue, so it had to find some actual people who would claim they’ve been harmed by the health care law. Thus, David King, a 64-year-old Vietnam vet, was recruited to be the lead plaintiff in King v. Burwell, which is now in the Supreme Court’s hands. He and three co-plaintiffs were chosen to put sympathetic human faces on what essentially is a right-wing political ploy.
But who are they? An investigative article in Mother Jones magazine by Stephanie Mencimer reveals that King’s modest income as a self-employed limo driver exempts him from Obamacare’s insurance mandate — so he’s been done no harm by the law and, therefore, has no standing to sue. Moreover, as a veteran, he’s entitled to VA care and, in a few months, to Medicare, making him double-covered by public health programs. Mr. King’s main reason for being on CEI’s lawsuit appears to be that he loathes Obama, referring to him as “a joke” and “the idiot in the White House.”
None of the three other recruits seem to have been harmed by Obamacare, either. “I don’t know how I got on this case,” says Brenda Levy, adding that, “I don’t like the idea of throwing people off their health insurance.” Then there’s Rose Luck, whose low income also exempts her from the law’s mandates. But she, too, fiercely loathes Obama. She posted on her Facebook page that she “wouldn’t admit he was our president,” calling him “The anti-Christ” who only won the Oval Office because “he got his Muslim people to vote for him.”
This lawsuit was a fraud from the get-go — and if five Supremes use it to take away the health coverage of some 10 million Americans, they’ll also be exposed as rank political hatchetmen masquerading as “justices.”
By: Jim Hightower, The National Memo, March 4, 2015
“Be Very Afraid Of ‘King v. Burwell'”: It’s Whether Or Not The United States Has Essentially Become A Banana Republic
There was a society of men among us, bred up from their youth in the art of proving, by words multiplied for the purpose, that white is black, and black is white, according as they are paid. To this society all the rest of the people are slaves.
–Jonathan Swift, Gulliver’s Travels, 1726
The real question before the Supreme Court in the ballyhooed case of King v. Burwell isn’t merely the continuance of the mandated health insurance subsidies of “Obamacare.” It’s whether or not the United States has essentially become a banana republic — an oligarchy whose legal institutions exist to provide ceremonial cover for backroom political power plays.
Almost regardless of what you think of the Affordable Care Act, legalistic chicanery of the kind on display shouldn’t be rewarded. That King v. Burwell has reached the high court is bad enough. Should the Roberts Court hand down a 5-4 decision based upon a tendentious misreading of the statute, several things will happen: An estimated 8.2 million Americans will lose health insurance coverage, the U.S. health care system will be thrown into economic chaos, and a few thousand citizens will no doubt die.
To a certain kind of person styling himself “conservative,” this would be perfectly all right. In an op-ed titled “End Obamacare, and People Could Die. That’s Okay,” one Michael R. Strain argues that higher death rates are “an acceptable price to pay for certain goals,” including “less government coercion and more individual liberty.”
Acceptable to Strain and his colleagues at the American Enterprise Institute, that is, a plutocrat-funded Washington think tank whose resident “scholars” are handsomely paid to mimic the values of 19th-century Russian aristocrats.
Along with the human casualties, the U.S. Supreme Court’s prestige as a fair arbiter would also be irrevocably damaged. As New York Times legal correspondent Linda Greenhouse argues, “The Court has permitted itself to be recruited into the front lines of a partisan war. Not only the Affordable Care Act but the Court itself is in peril as a result.”
And that would damage what’s left of American democracy.
During his 2005 confirmation hearings, Chief Justice Roberts likened himself to an umpire. His job would be to call balls and strikes, not to reinvent the rules of baseball. It was a very shrewd formulation, as most Americans prefer a non-partisan judiciary. “It is a very serious threat to the independence and integrity of the courts to politicize them,” Roberts has said repeatedly.
With the signal exception of Citizens United, a 5-4 decision invalidating campaign finance laws and pushing the nation in the direction of plutocracy, some observers do credit the Chief Justice with making an effort to move the Court away from overt partisanship. Almost two-thirds of recent Supreme Court rulings have been unanimous.
However, Roberts’ deciding vote legitimizing Obamacare’s insurance mandate infuriated many Republicans. They see in King v. Burwell an opportunity for the Chief Justice to redeem himself. All he needs to do is persuade a majority of the Justices, presumably including himself, that because the Affordable Care Act speaks of subsidies being available through a health insurance “exchange established by a state,” it means only, exactly, and literally that.
If your state—say, New York—set up and ran its own marketplace, then you’re eligible for Obamacare.
If not, you’re not.
No more health insurance subsidies for residents of Texas, Oklahoma and 32 other states that let the feds set up exchanges for them.
Never mind that the law specifically requires the U.S. Department of Health and Human Services to “establish and operate such exchange[s] within the states.” Never mind that nobody anywhere understood the Affordable Care Act to have such a restrictive meaning when it was being debated, enacted and put into operation. Such an interpretation certainly never came up during the difficult period when the HealthCare.gov website labored to get up to speed.
Never mind too that time-worn Supreme Court precedents direct judges interpreting laws to consider not isolated snippets of language, but “the specific context in which that language is used, and the broader context of the statute as a whole.” (The wording is from a 1997 opinion by Justice Clarence Thomas.)
For that matter, if anybody in Congress on either side thought the law meant what the plaintiff’s lawyers in King v. Burwell claim, why have we been having the political battle of the century about it? Why vote 56 times to repeal a law that only applies in 16 of the 50 states?
It’s an odd form of legalistic fundamentalism the justices must consider, the constitutional equivalent of a guy trying to beat a ticket for driving 95 mph in a school zone because a typo reads “ozone.”
The wonder is that the Court elected to hear the case at all after a three-judge appeals court in Richmond rejected it unanimously.
And the scary question is why?
By: Gene Lyons, The National Memo, March 4, 2015
“This SCOTUS Destroyed America”: How Citizens United Is Ruining More Than Our Elections
In the years since conservative Supreme Court Justice Anthony Kennedy’s landmark Citizens United v. FEC decision gave wealthy interests the political power they’d apparently lacked, the media has mostly been interested in how the ruling was affecting elections. On the presidential level, the consensus, at least among political scientists, is that the impact has been marginal. But in less rarefied air, like the grubby environs of Congressional campaigns or the sometimes sordid realm of state and municipal politics, the consequences of the ruling have been substantial. It is quite likely that dozens of state governments in the U.S. will reflect Kennedy’s vision — as well as that of the Koch brothers — for decades to come.
What has gone less-examined, however, is the role that dark money — which is spending by groups that are supposedly devoted to “social welfare,” and that consequently don’t have to reveal their donors — has played since 2010 in the crafting of legislation. This is somewhat odd, in retrospect, since the ostensible point of winning an election, after all, is to legislate. But perhaps the political and media class’s lack of attention to the new reality of sausage-making can be attributed to a campaign-finance version of climate change fatalism. One can gaze up at only so many seemingly insurmountable obstacles before wondering if one’s time would be better spent coming to terms with giving up.
And make no mistake: The reality of lawmaking in post-Citizens United Washington is enough to make even the most stalwart campaign finance reformers wonder if their advocacy and organizing is little more than professionalized windmill tilting. As the Huffington Post showed this week in a lengthy, impressive and profoundly dispiriting report, the walls separating the interests of the wealthy from the legislative process that a century of reformers fought to build have been leveled. They were never as lofty or sturdy as reformers would have wished, of course. But they now exist as little more than rubble and dust.
One of the things the report from HuffPo’s Paul Blumenthal and Ryan Grim makes clear is the way Citizens United’s pernicious effect on lawmaking is at once deliberately opaque and ploddingly simple. To take one of the many examples of now-kosher corruption they detail as a case in point, look at the story of the Property Casualty Insurers Association of America (PCI) and the 2014 election. Blumenthal and Grim note that PCI is lucky enough to have two former aides to Speaker of the House John Boehner on its lobbying team. Even better for PCI, the trade group had the foresight to donate significant chunks of money as of late to pro-Republican outside groups: $185,000 since 2012, they report.
But they weren’t done there. In addition to all of those obviously stringless donations to arms of the GOP machine, PCI also decided to give $75,000 to Crossroads GPS, the Karl Rove-affiliated “social welfare” nonprofit, and $25,000 to the Kentucky Opportunity Coalition, a “non-partisan” nonprofit. Both organizations, according to HuffPo, are run by Steven Law, who just so happens to be a member of now-Senate Majority Leader Mitch McConnell’s “inner circle.” Incidentally, both groups also happened to spend large amounts of money to support McConnell in his 2014 campaign against Democrat Alison Lundergan Grimes. Outside groups spent $1.3 million in support of Grimes and $16.4 million in opposition, while McConnell got $5.7 million outsider bucks in his favor and $10.5 million going the other way.
For PCI, the pro-McConnell donations ended up being money well spent. McConnell obliterated Grimes after a campaign that had been, for the most part, surprisingly competitive. And because GOP Senate candidates in Iowa and Georgia, who also were supported by outside groups using PCI money, defeated their Democratic opponents, too, McConnell became the new majority leader of the Senate. And wouldn’t you know it, one of the first things the McConnell-run Senate did with the reins of power was to pass a provision rolling back capital standards on insurance companies that were implemented by Dodd-Frank. Believe it or not, this was an act of deregulation that PCI strongly supported.
Now, is this all proof that McConnell engaged in a quid pro quo with PCI and other members of the insurance industry? That the current Senate majority leader told the folks at PCI to make a gesture or two (or three, or 4,000) to show how much they care about supporting a “coalition” to enhance Kentucky’s “opportunity”? No, it’s not. It may be suggestive — and to the jaundiced eye, extremely so — but it’s hardly irrefutable evidence. As defenders of these types of arrangements are quick to note, it’s eminently possible that removing obscure provisions of Dodd-Frank just happens to be an issue on which the Kentucky senator and big insurance fortuitously agree.
But what’s lost in all the fuzziness, which Blumenthal and Grim deftly filter out, is that the world Justice Kennedy’s decision created was, by his own admission, supposed to be one in which even the appearance of corruption was negated. Democracy would suffer no harm, Kennedy assured us, by letting “independent” groups like Crossroads GPS or the Kentucky Opportunity Coalition spend at will with precious little regulation. “[I]ndependent expenditures do not lead to, or create the appearance of, quid pro quo corruption,” Kennedy writes in the majority opinion for Citizens United. “That speakers may have influence over or access to elected officials does not mean that those officials are corrupt,” he assures. “And the appearance of influence or access will not cause the electorate to lose faith in this democracy.”
At the time that the ruling was delivered, Kennedy’s faith that access and influence would not corrupt the system was exceeded in curiousness only by his belief that the American people would feel similarly. But as the years have passed, and as studies showing the U.S. to be a donor-run system akin to oligarchy have gone mainstream, his declaration has begun to make a bit more sense. Just so long as “the electorate” is defined as the lobbying industry and its clients, his prediction looks downright clairvoyant. I bet the fine people at the Property Casualty Insurers Association of America — who are probably investing right now in the Jeb Bush-affiliated Right to Rise “social welfare” group — would strongly agree.
By: Elias Isquith, Salon, February 28, 2015
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