“The Real Scandal In Denny Hastert’s Life”: Immersed In The Immoral Swamp Of Washington’s Game Of Money Politics
Washington’s establishment of politicos, lobbyists, and media sparklies are shocked — shocked to their very core! — by the scandalous sexual revelations about Dennis Hastert.
The portly Republican, who’d been Speaker of the House a decade ago, was an affable, nondescript Midwesterner who was popular with his fellow lawmakers. A former high-school wrestling coach in rural Illinois, Hastert was viewed as a solid salt-of-the-Earth fellow embodying Middle America’s moral values. So his recent indictment for paying $1.7 million in hush money to a man he apparently molested during his coaching years has rocked our Capitol.
“I’m shocked and saddened,” said the current GOP Speaker, John Boehner. Likewise, former colleagues from both sides of the aisle were dismayed that “our Denny” would have been engaged in child molestation and now caught in an illegal financial cover-up of that abomination. “This has really come out of nowhere,” exclaimed Rep. Peter King, a longtime ally of the man whom all of Washington considered a straight arrow.
Washington’s gossip mill is spinning furiously over last week’s revelations. Before we join these officials in wailing about Dennis Hastert’s alleged long-hidden molestation, however, let me note that while they are bewildered by his sexual impropriety, they find it not worthy of mention — much less condemnation — that Denny has long been immersed in the immoral swamp of Washington’s game of money politics. The guy they profess to love as a paragon of civic virtue — “the coach,” as Rep. King hailed him — was one of the most corrupt Speakers ever. What about the filthy, backroom affair he has been openly conducting with corporate lobbyists for nearly two decades?
During his tenure as House Speaker, Hastert turned the place into the Willy Wonka Chocolate Factory of corporate favors. By putting campaign cash into Republican re-election coffers controlled by him and his top hitman, Majority Leader Tom DeLay, corporate interests gained entry into Denny’s psychedelic playhouse. With Hastert himself singing “Candy Man,” the favor seekers could help themselves to the river of chocolate running through Congress’ back rooms.
Remember “earmarks,” the sneaky tactic of letting congressional leaders secretly funnel appropriations to favored corporations and projects? Earmarks became the trademark of Hastert’s regime, sticking taxpayers with the tab for such outrages as Alaska’s “Bridge to Nowhere.” Indeed, Denny grabbed a $200 million earmark for himself, funding an Illinois highway near land he owned — land he then sold, netting millions in personal profit.
When he left Congress, Hastert moved just a short limo ride away to become — what else? — a corporate lobbyist. Trading on his former title, personal ties to House members and knowledge of how the chocolate factory runs, he has been hauling in a fortune as a high-dollar influence peddler for makers of candy-flavored cigarettes, Peabody Coal Company, land developers and other giants. And guess what his specialty is? Getting “riders” attached to appropriations bills, so public money is channeled directly to his clients.
Hastert openly traded legislative favors for campaign cash, including profiting personally from his powerful position. And, when he was squeezed out because of the corruption, he didn’t return to the home folks — he became a K-Street lobbyist, continuing to profit to this day by doing corporate favors. That’s how he got so rich he was able to shell out $1.7 million in hush money to the student he abused.
Good ol’ Denny has always thought he was above the law. Just as Hastert should be held accountable for the deep personal damage his alleged molestation would’ve done to his former student, so should he also pay for his abominably indecent abuse of office, his self-gratifying groping of public funds and his repeated, sticky-fingered violations of the American people’s public trust.
By: Jim Hightower, The National Memo, June 3, 3015
“Deepwater Wind”: America Is Finally Getting Its First Offshore Wind Farm. Conservatives Are Trying To Make Sure It’s The Last
European countries long ago decided to take the long-term view of clean energy. Denmark put up its first wind turbine offshore 24 years ago, in 1991; today, Europe has at least 70 complete wind farms and 2,300 turbines in its waters. The United States is just getting started on catching up to its transatlantic neighbors: by July, Deepwater Wind will have steel in the ground for the first offshore wind farm off of Rhode Island. If all goes according to plan, the Block Island wind farm will begin generating power by fall 2016.
In the U.K., though, wind subsidies are now at risk after the Tories won Britain’s recent elections, sweeping in a new wave of austerity government. (Support for wind and solar development there has historically been stable, however, compared to the U.S.) Just 3 percent of the world’s wind power is based offshore, and the United Kingdom is the leader: They generate half of global offshore wind energy.
In the U.S., conservatives like to propose funding only for research, which doesn’t help businesses take the leap into entry—the nascent energy source is still several times more expensive to produce than conventional fuels, like oil and gas, that have benefited from over a century of government subsidies.
The industry requires some taxpayer help to overcome the initial costly barrier to entry and absurd logistics in the U.S. market. For example, the U.S. lacks specialized 500-foot ships to carry steel for wind turbines, so supplies and ships must come from Europe. Potential developers have had to work around an obscure trade law that doesn’t let foreign ships that intend to install wind power sail into U.S. ports (in-depth explanation here).
Onshore, the U.S. wind industry is growing faster than any other electricity source, thanks precisely to this kind of investment. The main wind subsidy is the wind production tax credit, which provides 2.3 cents per kilowatt-hour for the first ten years of production. But Republican infighting over the tax credit (some, like Iowa Sen. Chuck Grassley support it, while plenty others don’t) means that it is regularly endangered. Some of that opposition is fueled by fossil fuel trade groups, which have aggressively lobbied against the credit (including the Koch-backed American Energy Alliance). The tax credit expired at the end of 2014; already, wind industry manufacturers scale back their plans when they face uncertainty. It’s a vicious cycle.
Deepwater Wind’s Block Island wind farm is both a less ambitious and less controversial version of another proposed project, the 130-turbine Cape Wind, that’s now sidelined indefinitely because of its biggest critic—the billionaire Bill Koch. In essence, his argument was “not in my backyard.” Koch called the proposed plant “visual pollution” and worried it would hurt his “ability to acquire a special property where I can create a family compound for my children.” The project never gained local support, and, in January, the developer dropped its contracts.
On the other hand, Deepwater Wind will have five turbines spinning 18 miles off the coast of Rhode Island, intended to power 17,000 homes. This one stands a much better chance of survival than Cape Wind. Let’s hope it’s successful.
By: Rebecca Leber, The New Republic, May 14, 2015
“Getting The Sports Moguls Off Our Backs”: The Subsidy-Bloated Profits Generally End Up In The Pockets Of The Owners
It was not out of a sense of decency that the National Football League recently let go of its tax-exempt status. You see, as a tax-exempt organization, the NFL had to disclose Commissioner Roger Goodell’s compensation — $44.2 million in 2012. That seemed an excessive sum for the head of a “nonprofit” freed from having to pay any federal income tax. Now the NFL can keep it secret.
Tax exemption is a subsidy. The taxes the NFL money machine didn’t have to pay, everyone else had to pay. Thanks go to former Sen. Tom Coburn (R-OK), Rep. Jason Chaffetz (R-UT), and Rep. Elijah Cummings (D-MD), for railing against such unsightly deals.
But that’s not the only good news for citizens tired of being milked by billionaire sports moguls. Consider Verizon’s decision to let customers buy TV packages that do not include ESPN or other sports channels.
An explanation: Animal Planet and Food Network are not why TV bills are so ludicrously high. What drive them up are the enormous fees the sports channels extract for their programming.
ESPN alone tacks an estimated $7 on monthly bills. By comparison, USA Network adds less than $1.
An interesting calculation: If every month you put $7 into an investment with an annual return of 4 percent, you’d have $1,027 after 10 years. These things add up.
It was not charity that prompted Verizon to let its customers buy a smaller base package of channels, plus extra bundles containing the channels they actually watch, at lower cost. Every month, thousands of Americans — incensed by their monthly TV bills and now able to get most of what they watch from the Internet — have been “cutting the cord,” that is, dropping their cable, satellite, or fiber-optic TV service altogether.
Anyhow, ESPN has dragged Verizon Communications into court. The sports network, the Disney empire’s most lucrative business, claims that Verizon broke a contract requiring that ESPN channels be part of its basic offerings. Verizon says that any of its customers can obtain ESPN through a bonus bundle at no additional cost and that therefore it is included.
Never did I think I’d say this, but I am rooting for my pay-TV provider.
On to another reason to cheer. President Obama’s proposed budget would ban the financing of professional sports stadiums with tax-exempt bonds. Such bonds lower borrowing costs for the zillionaire team owners. Currently, 22 NFL teams play in stadiums financed by tax-exempt bonds, as do 64 professional baseball, basketball and hockey teams.
Why would tax-exempt bonds — created to help cities, towns, and states pay for needed infrastructure — go to benefit mega-businesses? Because the team owners have succeeded in conning locals to see sports arenas as economic magnets pumping money into their weary tax bases.
Lots of studies contradict this self-serving propaganda. First off, the economic activity generated by the teams often pales next to the concessions wrenched from the taxpayers. Secondly, many of the dollars spent at the games are dollars that would have otherwise been left at local businesses, such as restaurants.
Furthermore, the subsidy-bloated profits generally end up in the pockets of the owners and their magnificently paid players — who promptly take them out of town. With all due respect to Cleveland, one doubts that LeBron James spends many of his millions there.
Ending tax-exempt bonds for sports arenas might reduce our elected officials’ temptation to sacrifice their taxpayers in return for good tickets to the game. That would be the best outcome.
They who love professional sports should pay for them.
By: Froma Harrop, The National Memo, May 7, 2015
“It Ain’t Over Yet, There’s A Whole New Inquiry”: Christie’s Administration Is Facing Another Investigation
If after last week’s Bridgegate indictments you thought Chris Christie was finally done as the focus of government investigations, think again. The Republican governor’s administration in New Jersey is facing a whole new inquiry — this one involving hundreds of millions of dollars, and not just blocked-off bridge lanes.
At issue are the fees being paid by New Jersey’s beleaguered public pension system to Wall Street firms. In recent years, Christie’s officials have shifted more of the retirement savings of teachers, firefighters, police officers, and other public workers into the hands of private financial firms. That has substantially increased the management fees paid by taxpayers to those firms. Indeed, while Christie says the pension system cannot afford to maintain current retirement benefits, pension fees paid to financial firms have quadrupled to $600 million a year — or $1.5 billion in total since he took office in 2010.
In recent months, details have emerged showing that Christie officials have directed lucrative pension management deals to some financial companies whose executives have made contributions to Republican groups backing Christie’s election campaigns. Additionally, Christie’s officials have admitted that they have not been fully disclosing all the fees the state has been paying to private financial firms.
Not surprisingly, this has made the trustees who oversee the state’s retirement system more than a little bit nervous — especially since the ever-higher fees have coincided with below-median returns for the state’s pension fund. So the trustees began asking questions, and when they didn’t get the answers they were looking for, they announced in April that they are launching a formal investigation of the matter.
Wayne Hall, the chairman of one of the state’s pension funds, told the Newark Star-Ledger that the new investigation is designed to help retirees understand why the state is paying so much.
“I’m a layman. I’m not on Wall Street. I’m not an investor, and I have 33,000 people that I answer to and they’re not investors either,” he told the newspaper. “Why are we paying that kind of money? When I see the exorbitant fees the state has been paying for the last couple of years, I have to question that.”
In their quest for better disclosure, Hall and his colleagues received a boost from an unlikely source: conservative activists. When it comes to pensions, those activists are often calling for benefit cuts, but when it comes to transparency, they are standing on the same side as the retirees.
“Both government workers and taxpayers deserve to know why such an incredible sum is being expended every year with the current system in deep crisis,” said Erica Klemens of the New Jersey chapter of Americans for Prosperity. “These are dollars that could be funding the system and preventing the state’s pension hole from growing even deeper. The decision by the trustees to look into this matter is the right thing to do.”
You might assume that the conservative support was designed to set the stage for New Jersey’s Republican governor to cooperate with the investigation’s push for transparency. But no — quite the opposite.
Only days after prosecutors indicted his appointees in the Bridgegate affair, Christie vetoed a bipartisan anti-corruption bill designed to insulate the state’s pension system from undue political influence. One of that bill’s provisions would have forced the state to better disclose the fees being paid to politically connected Wall Street firms.
That leaves the trustees to try get to the bottom of what’s really happening at the state’s $80 billion pension fund. They may not have the governor’s bully pulpit, but thousands of retirees are relying on them to bring the truth out from the shadows.
By: David Sirota, Senior Writer at The International Business Times; The National Memo, May 8, 2015
“The Most Opaque Investment Schemes Ever Devised”: Cities And States Paying Massive Secret Fees To Wall Street
California’s report said $440 million. New Jersey’s said $600 million. In Pennsylvania, the tally is $700 million. Those Wall Street fees paid by public workers’ pension systems have kicked off an intensifying debate over whether such expenses are necessary. Now, a report from an industry-friendly source says those huge levies represent only a fraction of the true amounts being raked in by Wall Street firms from state and local governments.
“Less than one-half of the very substantial [private equity] costs incurred by U.S. pension funds are currently being disclosed,” says the report from CEM, whose website says the financial analysis firm “serve(s) over 350 blue-chip corporate and government clients worldwide.”
Currently, about 9 percent — or $270 billion — of America’s $3 trillion public pension fund assets are invested in private equity firms. With the financial industry’s standard 2 percent management fee, that quarter-trillion dollars generates roughly $5.4 billion in annual management fees for the private equity industry — and that’s not including additional “performance” fees paid on investment returns. If CEM’s calculations are applied uniformly, it could mean taxpayers and retirees may actually be paying double — more than $10 billion a year.
Public officials are overseeing this massive payout to Wall Street at the very moment many of those same officials are demanding big cuts to retirees’ promised pension benefits.
“With billions of public worker and taxpayer dollars put at risk in the highest-cost, most opaque investment schemes ever devised by Wall Street for a decade now, investigations that hold Wall Street profiteers accountable are long, long overdue,” said former Securities and Exchange Commission attorney Ted Siedle.
Private equity firms have argued that their fees are worth the expense, because they supposedly deliver returns for investors that beat low-fee index funds, which track the broader stock market. But those private equity returns are typically self-reported by the firms over the life of those longer-term investments, meaning there are few ways to verify whether the returns are real. Indeed, a recent study from George Washington University argued that private equity firms are using their self-reporting authority to mislead investors into believing their returns are smoother and more consistent than they actually are.
In a 2014 speech, the SEC’s top examiner, Andrew Bowden, sounded the alarm about undisclosed fees in the private equity industry, saying the agency had discovered “violations of law or material weaknesses in controls over 50 percent of the time” at firms it had evaluated.
To date, however, the SEC has taken few actions to crack down on the practices, but some states are starting to step up their oversight.
In New Jersey, for instance, pension trustees announced a formal investigation of Gov. Chris Christie’s administration after evidence surfaced suggesting that the Republican administration has not been disclosing all state pension fees paid to financial firms.
In Rhode Island, the new state treasurer, Seth Magaziner, a Democrat, recently published a review of all the fees that state’s beleaguered pension fund has paid. The analysis revealed that the former financial firm of Democratic Governor Gina Raimondo is charging the state’s pension fund the highest fee rate of any firm in its asset class.
In Pennsylvania, the new Democratic governor, Tom Wolf used his first budget address to call for the state “to stop excessive fees to Wall Street managers.”
These moves are shining a spotlight on one of the most lucrative yet little-noticed Wall Street schemes. With so much money at issue – and with pensioners retirement income on the line — that scrutiny is long overdue.
By: David Sirota, Senior Writer at the International Business Times; The National Memo, April 24, 2015
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