“A Protection Racket”: The Corrupt Bargain Between Politicians And The NFL
For a number of years, I have been uneasy about the symbiotic and corrupt relationship between lawmakers and professional sports leagues, especially football. Many years ago, I got a call from a reporter with Sports Illustrated. I returned the call, mostly out of curiosity about why a sports reporter was calling a politics/Congress person. It turned out there was a legitimate reason. The SI reporter had noticed that Senator John Warner of Virginia served on the board of directors of the Washington Redskins; he wondered whether that was allowed under the ethics rules of the Senate—and if so, why?
Of course, as a general matter, members of Congress could not serve on corporate boards. But somehow, the sports team was viewed differently. It should not have been. The Redskins, then owned by Jack Kent Cooke, was a very large for-profit company, with clear and important interests in front of the federal government. Professional football had an antitrust exemption, worth a fortune and even then controversial. The Redskins, like the other National Football League teams, enjoyed very favorable depreciation rules for its players, tax advantages that meant less revenues for the government and more profits for the owners. Warner was a great senator, a man of integrity. But as a member of the board of the team, he had a fiduciary responsibility to look after its interests. And as a senator, he had a duty to look after the interests of Virginia and America. What if those duties clashed?
The Redskins, back then, were the only game in town, an obsession for Washington. Cooke’s owner’s box each weekend was filled with Washington power brokers, including senators, House leaders, the chairman of the Fed, cabinet officers, and others. Cooke reveled in their friendship; they reveled in their access.
The buddy-buddy relationship between the NFL and lawmakers led to the antitrust exemption in 1961. This is a multibillion-dollar business; why should it be given an exemption denied to other businesses and industries not doing professional sports? There was even less legitimacy to the decision Congress made subsequently to enable the NFL itself to function as a nonprofit organization, with all the benefits that accrue to other nonprofits. Nonprofit? Find me a nonprofit that pays its CEO $44 million! Of course, the NFL is not a nonprofit in reality, and it has spun a web of offshoots that pull in bundles of money for licensing and other lucrative businesses.
The unhealthy and unholy relationship the NFL has long maintained with Congress has also been evident with local and state governments that eagerly jump in to make taxpayers pay through the nose to attract or keep teams through separate tax breaks; public financing of stadiums; giveaways or bribes in the form of granting luxury boxes and their huge streams of revenue to the team owners instead of to the taxpayers footing the bill for the stadiums; and so on. If local politicians are not eager enough, team owners bludgeon them into submission with threats to move the teams. As Steve Almond wrote in The Washington Post, this is crony capitalism plain and simple—I would add, along with a dose of a protection racket.
Roger Goodell, the NFL commissioner, has his own links to Washington. His father, whom I knew and deeply admired, was a Republican senator from New York who was courageous in his deep opposition to American involvement in Vietnam, infuriating the Nixon administration—not the only position he took that broke from party orthodoxy. I became disillusioned with son Roger long before the current fiasco, when he quickly blew off the Obama administration’s request to have the NFL help uninsured football fans learn about their access to health insurance under the Affordable Care Act. This was not about endorsing or supporting a political side; it was about informing people about getting insurance. No doubt many younger NFL fans play football themselves—and some otherwise healthy athletes will get concussions, fractures, spinal injuries, and more while doing so; without insurance, they could have their lives devastated. Goodell’s move was a craven one.
Now he is under siege for his stumbles and missteps over domestic violence. He is also facing criticism for the league’s longtime indifference to the brain injuries suffered by so many players in the violent sport. But he is for the moment secure in his job; the owners are firmly behind him. And why not? His stewardship, built on that crony capitalism, makes these very wealthy people even wealthier, and they have been happy to reward him with staggering benefits.
I am a sports nut and an ardent football fan. Whether Goodell stays or goes is not really the issue here. To me, the issue is that it is past time for Congress to reexamine its unhealthy relationship to this huge set of businesses, to reconsider both the antitrust exemption and the farcical nonprofit status of the league. Football is sport, its fan base is huge, including members of Congress. But it is first and foremost a business, and it is simply wrong to ignore that reality in making public policy.
By: Norm Ornstein, The Atlantic, September 25, 2014
“The Koch-Tested, Koch-Approved Version”: Paul Ryan’s Faux Populism Isn’t Going To End Poverty Or Reduce Inequality
Paul Ryan’s fellow Republicans are quick to dismiss Elizabeth Warren as too radical, too progressive, too populist.
But Ryan is trying—a bit clumsily, but trying all the same—to borrow a page from the Massachusetts senator as he seeks to remake himself in anticipation of a potential 2016 run for the Republican presidential nomination. He’s talking about poverty, about inequality, about shifting the focus away from meeting the demands of corporations and toward meeting the needs of Americans.
Mitt Romney’s running mate is abandoning Romneyism for populism—or what former Secretary of Labor Robert Reich has referred to as “Paul Ryan’s Faux Populism.”
Instead of repeating the Mittnomers of 2012—“Corporations are people, my friend”—Ryan is suddenly informing fellow conservatives, “There’s another fallacy popular among our ranks. Just as some think anything government does is wrong, others think anything business does is right. But in fact they’re two sides of the same coin. Both big government and big business like to stack the deck in their favor. And though they are sometimes adversaries, they are far too often allies.”
It is hard to argue with Ryan’s reasoning. Populists and progressives have warned for more than a century that corporations are “boldly marching, not for economic conquests only, but for political power.” The author of those words, former Wisconsin Supreme Court Justice Edward Ryan , asked in 1873: “Which shall rule—wealth or man; which shall lead—money or intellect; who shall fill public stations—educated and patriotic free men, or the feudal serfs of corporate capital?” Elizabeth Warren confirmed Ryan’s worst fears when she addressed Netroots Nation last week and declared, “The game is rigged and the rich and the powerful have lobbyists and lawyers and plenty of friends in Congress. Everybody else, not so much.”
And now, Paul Ryan is on-message, announcing as only a career politician can, that “our country has had enough of politics.” He’s proposing to “reconceive the federal government’s role in the fight against poverty.” And he is even ripping corporations, decrying the way in which big government has become “a willing accomplice” of big business.
Ryan explained last week at Hillsdale College’s Center for Constitutional Studies and Citizenship session that “crony capitalism isn’t a side effect; it’s a direct result of big government.”
Grab the pitchforks!
But don’t look for Paul Ryan on the front lines of actual fights to reduce inequality or address injustice.
The House Budget Committee chairman, who on Thursday released an “anti-poverty proposal” that rehashed decades-old schemes to scale back anti-poverty initiatives and regulatory protections for low-income Americans, offers scant evidence of a serious determination to solve the problems that have got Americans up in arms. If Ryan was serious, he wouldn’t be proposing, as his “Opportunity Grant” plan does, to “consolidate” existing federal programs to aid the poor into block grants to the states—an approach that would allow Republican governors who have already shown a penchant for undermining healthcare, food-stamp and education initiatives the “flexibility” to do even more harm.
Congressman Chris Van Hollen, a Maryland Democrat who serves with Ryan on the Budget Committee, nails it when he warns about a proposal that “uses the sunny language of ‘reform’ as a guise to cut vital safety-net programs.”
So if the congressman is not worried about developing a serious response to the problem of inequality, what is on his mind?
Ryan is worried about solving his own problem: an association in the public’s mind with the failed messages of the 2012 Romney-Ryan campaign.
Last week’s populist speech at the Center for Constitutional Studies and Citizenship and this week’s poverty speech at the American Enterprise Institute begin the roll-out of Paul Ryan Version 2.0. Next comes the August publication of Ryan’s 2016 campaign book, The Way Forward: Renewing the American Idea, complete with its epic cover shot of Americans reaching out to touch a triumphal Ryan. Then there’s the bus tour.
Yes, the bus tour.
So Ryan is campaigning. To the extent that it is possible he will do so in populist style and with populist rhetoric about crony capitalism and fighting poverty.
But don’t be confused.
This is still the same Paul Ryan who went to the floor of the House in 2008 and rallied Republicans to support the Wall Street bailout. This is still the same Paul Ryan who opposed regulation of the big banks. This is still the same Paul Ryan who supported and continues to support) the free trade deals demanded by multinational corporations. This is still the same Paul Ryan who has peddled Social Security, Medicaid and Medicare “reforms” that would turn sound programs into vehicles for steering federal funds into the accounts of Wall Street speculators and health-insurance corporations.
This is still the same Paul Ryan who during the current election cycle has padded his campaign committee and “leadership PAC” accounts with almost $9 million in donations—with Wall Street securities and investment interests and the health-insurance industry giving most generously. And this is the same Paul Ryan who, when Congress took its August break in 2013 jetted home to Wisconsin via Arizona—where he was a featured speaker at the annual retreat for billionaire donors organized by the Koch brothers.
The other featured speaker was then–House majority leader Eric Cantor, for whom the ensuing months did not go well. Cantor’s Republican primary defeat—at the hands of a critic of “crony capitalism”—provided an indication that the American people are increasingly agitated. And increasingly disinclined toward the sort of insider politics practiced by career politicians such as Ryan.
Ryan got the signal.
He is rebranding himself.
He has downloaded some populist rhetoric to go with his “kinder, gentler” talk about poverty.
But Paul Ryan’s populism is not the real thing. It’s the Koch-tested, Koch-approved version.
By: John Nichols, The Nation, July 24, 2014
“Chutzpah Prize Of The Week”: It’s Only Crony Capitalism When The Koch Brothers Don’t Benefit
The right-wing press is chock-a-block with articles decrying the Obama administration’s romance with industrial policy. So reflexive is this ideology that some of them are even written by major beneficiaries of industrial policy, whose sense of entitlement must be so ingrained that they fail to notice this anomaly.
Exhibit A appeared in Monday’s Wall Street Journal op-ed page, in which Charles Koch of Koch Brothers fame took out after crony capitalism and industrial policy.
“We are on dangerous terrain when government picks winners and losers in the economy by subsidizing favored products and industries,” Koch wrote. He further complained that government is currently “subsidizing and mandating politically favored products in the energy sector,” singling out “solar, wind and biofuels” for examples of sectors currently being helped out.
But not a word about oil and gas can be found in Koch’s litany of complaints. Could this be because Koch Industries, of which Koch is chairman and CEO, was originally and is still primarily an oil-refining and pipeline company, though it has also diversified into such fields as paper, asphalt, chemicals, cattle ranches, commodity trading, and buying elections? A study by the Environmental Law Institute has tallied the amount of U.S. subsidies to the fossil fuel industry between 2002 and 2008 at roughly $72 billion. Earlier this year, President Obama called for ending the subsidies to oil companies, but a bill by Senator Robert Menendez (D-N.J.) to do just that failed to muster the 60 votes required to surmount the cloture barrier this summer (it got 51 votes). Though Koch Industries spent more than $50 million on its lobbying efforts in Washington from 2006 and 2011, according to the Center for Responsive Politics, there’ s been no report of it lobbying for Menendez’s bill to end the government’s subsidy to the oil industry.
Koch’s hypocrisy isn’t his alone. It epitomizes the double standard of right-wing opponents of industrial policy who neglect to note all the industrial policies that benefit either their own industries (if they’re oil men, bankers, military contractors, and so on) or the industries that write them checks (if they’re politicians who are funded by oil men, bankers, military contractors, and so on). The oil depletion allowance is industrial policy, lowering the tax bills of such behemoths as Exxon-Mobil at a time when public needs and the deficit are soaring. The exclusion of derivatives from regulation, which banks insisted on over the cautionary objections of Clinton administration Commodities Futures Trading Commission chief Brooksley Born, was industrial policy, benefiting the banks while imperiling, and eventually bringing down, the entire economy. Congressional appropriations for military hardware that the Pentagon neither wants nor needs is industrial policy. The fact that 27 nations have treaties with the U.S. that enable their residents to avoid any U.S. taxation of their casino winnings is industrial policy that brings in millions, if not billions, in high-roller business to such GOP mega-donors as Sheldon Adelson and Steve Wynn. You get the picture.
Yet Koch, Adelson, Wynn and Wall Street are providing unprecedented levels of funding to the cause of removing Obama and his dangerous ideas about industrial policy.
Like I said, Chutzpah Prize for the Week, and it’s only Monday.
By: Harold Meyerson, The American Prospect, September 10, 2012
Soaring Inequality: “It’s Time To Take The Crony Out Of Capitalism”
Whenever I write about Occupy Wall Street, some readers ask me if the protesters really are half-naked Communists aiming to bring down the American economic system when they’re not doing drugs or having sex in public.
The answer is no. That alarmist view of the movement is a credit to the (prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be disappointed. More important, while alarmists seem to think that the movement is a “mob” trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.
To put it another way, this is a chance to save capitalism from crony capitalists.
I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins (who didn’t shorten the family name) lived in Poland, and their experience with Communism taught me that the way to raise living standards is capitalism.
But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.
When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.
The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.
Something similar is true today of the United States.
So I’d like to invite the finance ministers of Thailand, South Korea and Indonesia — whom I and other Americans deemed emblems of crony capitalism in the 1990s — to stand up and denounce American crony capitalism today.
Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.
The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability?
It’s not just rabble-rousers at Occupy Wall Street who are seeking to put America’s capitalists on a more capitalist footing. “Structural change is necessary,” Paul Volcker, the former chairman of the Federal Reserve, said in an important speech last month that discussed many of these themes. He called for more curbs on big banks, possibly including trimming their size, and he warned that otherwise we’re on a path of “increasingly frequent, complex and dangerous financial breakdowns.”
Likewise, Mohamed El-Erian, another pillar of the financial world who is the chief executive of Pimco, one of the world’s largest money managers, is sympathetic to aspects of the Occupy movement. He told me that the economic system needs to move toward “inclusive capitalism” and embrace broad-based job creation while curbing excessive inequality.
“You cannot be a good house in a rapidly deteriorating neighborhood,” he told me. “The credibility and the fair functioning of the neighborhood matter a great deal. Without that, the integrity of the capitalist system will weaken further.”
Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education.
“These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said.
Does that ring a bell?
So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives.
It’s time to take the crony out of capitalism, right here at home.
By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, October 26, 2011
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