First Step to Reducing National Debt

April 4, 2013, 7:55 a.m.

Sunlight is the Best Disinfectant

“For the second time in three days, we unseal criminal charges against a sitting member of our State Legislature. It becomes more and more difficult to avoid the sad conclusion that political corruption in New York is indeed rampant and that a show-me-the-money culture in Albany is alive and well.” -- Manhattan U.S. Attorney Preet Bharara, April 4, 2013

Benjamin Weiser and Marc Santora, "In 2nd Alleged Bribe Scheme, a Legislator Was in On the Case," New York Times, April 5, 2013, p. A1.

Congress’ first step in long journey

Nicholas Johnson

The Gazette, April 4, 2013, p. A5
Democrats and Republicans in Washington are seemingly suffering from ideological immobilization regarding the national debt.

Republicans’ Grover Norquist famously said he’d like a government small enough that he “can drown it in the bathtub.” Republicans fear that if taxes are increased, the liberal tax-and-spend Democrats will just squander the money on bigger government and more wasteful giveaways. Meanwhile, Democrats fear that free-range, feral Republicans will ultimately leave us with no solution for our surfeit of poor children other than Jonathan Swift’s suggestion that we eat them.

I understand their dilemma. Being honorable men and women, they know that when you take hundreds of thousands of dollars from someone you have a moral obligation to reciprocate, to meet your donor’s expectations of reward.

Years ago, I documented their expectations. The average rate of return was 1,000-to-one or more. The official gets a $100,000 “contribution”; the donor’s repaid $100 million for his “investment.” The payback can take the form of, say, subsidies, price supports, tax breaks, government contracts, public land, bailouts or tariffs. [Political cartoon credit: Unknown; multiple sources.]

The total isn’t chump change. The International Monetary Fund says global subsidies for fossil fuels alone are $1.9 trillion a year.

Recently, 10 percent of the Fortune 500 corporations had so many tax breaks they not only owed no taxes, they actually got refund checks!

Sen. Tom Coburn, R-Oklahoma, explains what others fear to whisper: “It’s not about tax policy, it’s about benefiting the political class and the well-connected and the well-heeled in this country.”

Legislators need money to be re-elected. Can you see why it’s easier for them to cut Social Security or food stamps than their donors’ rewards programs? (The poor are notoriously miserly when it comes to large campaign contributions.)

So what’s our nation’s first step on this journey of a thousand miles?

Here’s an idea. Ask the Congressional Budget Office and IRS to, first, identify all the special interest tax breaks that lobbyists have obtained. Some benefit an individual company; others an industry, or all business. Forget the other trillions in giveaways; focus on tax breaks.

Don’t eliminate these tax breaks; just make them visible subsidies, as appropriations. Publish them online. Hold news conferences to brief journalists and bloggers, and let them run with it.

Then see what happens. If the public doesn’t respond, well, that’s democracy for you. If they do, it might provide some backbone implants for our “representatives” in Washington.

And Des Moines.

The Gazette’s Erin Jordan has skillfully brought this approach to Iowa’s sales tax. (March 23) “Report: Iowa lost $3.9 billion in sales tax breaks in 2010; Breaks up 62 percent since 2005.”

I’ve written about applying it to TIFs (tax increment financing) — the local form of handing taxpayers’ money over to for-profit businesses, as in “TIF Towers,” http://fromdc2iowa.blogspot.com/2012/04/tif-towers.html.

When it comes to federal, state and local politicians transferring taxpayers’ money to for-profit companies (often in exchange for campaign contributions), the practices and consequences are similar, whether the special treatment comes from local TIFs, state sales taxes or federal corporate income taxes.

The first step to reform is also similar: public disclosure of what’s going on.

How much money is at stake? Who’s getting it? In exchange for how much in campaign contributions?

Neither the media nor public in our democratic society can begin to redress these abuses so long as they take the form of essentially invisible tax breaks, rather than debated appropriations of giveaways, openly arrived at, and shamelessly set upon the table, under lights.

If only Congress’ journey of a thousand miles could begin with this simple, single step.
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Nicholas Johnson, a former FCC Commissioner, teaches at the University of Iowa College of Law. Comments: www.nicholasjohnson.org and FromDC2Iowa.blogspot.com.
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Do you feel sometimes that your elected officials are sidestepping some of these major issues? Did you realize they've all been to dance classes? To "do a little sidestep" requires training, not to mention a good bit of talent:


[The preceding one-minute fair use clip is from the delightful 1982 R-rated full-length musical comedy, "Best Little Whorehouse in Texas," staring Burt Reynolds and Dolly Parton, among a great many other accomplished and well-known actors, and still available for rental and sale. It's based on a true story of a brothel outside LaGrange, Texas, that was ultimately closed down in 1973, following the work of investigative reporter Marvin Zindler of KTRK-TV, Houston. The writing was done by Larry King (whom I remember from Austin in the 1950s), the Governor was played by Charles Durning, and the studio was RKO Pictures. The film is copyright by, presumably, RKO. The use of this miniaturized, very brief clip is for non-commercial, educational and commentary fair use purposes only. Any other use may require the permission of the copyright owner.]

And here, for a little more serious approach to the subject, is Larry Lessig and his "We The People, and the Republic We Must Reclaim":



[Photo credit for opening photo: Unknown.]

# # #

Repealing Corporate Welfare: Step One

March 25, 2013, 8:50 a.m.

The Journey of a Trillion Dollars

"A journey of a thousand miles begins with a single step." 老子 (Lao-Tsu), Tao Te Ching, ch. 64 (c 531 B.C.; numerous translations). [Photo credit: multiple sources.]

Ain't it the truth? We've all confronted the impediments to taking that "single step" as we first try all the alternatives procrastination offers. If our goal is to begin a routine that includes a daily walk, it's literally true. But it's equally true of any other undertaking, from remodeling a kitchen, to getting out of Afghanistan, to . . . reducing our national debt.

The Democrats and Republicans in Washington are seemingly suffering from ideological immobilization. Republicans fear that if taxes are increased the tax-and-spend Democrats will just squander the money on bigger government and more wasteful giveaways. Their Grover Norquist famously said he'd like a government small enough that he "can drown it in the bathtub." Meanwhile, Democrats fear that free range feral Republicans will ultimately leave us with no solution for our surfeit of poor children other than Jonathan Swift's suggestion that we eat them. ("I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled . . .." Jonathan Swift, "A Modest Proposal: For Preventing The Children of Poor People in Ireland From Being A Burden to Their Parents or Country, and For Making Them Beneficial to The Public" (1729).)

One is reminded of Jerry Seinfeld's experience at the rental car counter: although he had a reservation, no car had been reserved for him. (Clerk: "I know why we have reservations." Seinfeld: "I don't think you do. If you did, I'd have a car. See, you know how to take the reservation, you just don't know how to hold the reservation and that's really the most important part of the reservation, the holding. Anybody can just take them.")

Here's a video of the bit:

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That is to say, I think that when it comes to our Washington officials' consideration of the observation that "a journey of a thousand miles begins with a single step," they know how to figure the distance of their journey, they just don't know how to take that single step. And that first step is really the most important part of the journey.

I understand their dilemma. Being honorable men and women, they know that if you take hundreds of thousands of dollars in "campaign contributions" from someone in business, you have a moral obligation to reciprocate, to meet your donor's expectations of reward in the form of generous grants of taxpayers' money. Indeed, as I documented in 1996, the average rate of return they had reason to expect at that time was something between 1000-to-one and 2000-to-one. The official gets $100,000 -- to avoid prison, he calls it a "campaign contribution," the donor calls it an "investment" -- and in return the donor expects $100 million in one form or another. Nicholas Johnson, "Campaigns: You Pay $4 or $4000," Des Moines Sunday Register, July 21, 1996, p. C2. (Presumably this is a fluctuating market, and I don't know what the return on such investments is these days; but there's some current evidence coming a few paragraphs from now.)

The return can take a variety of forms: subsidies, price supports, tax breaks, government contracts, public land, bailouts, or tariffs -- among others.

Although this flood of taxpayers' dollars involves far more than anything spent on children, the elderly, the poor, and working poor -- or other programs benefiting the 99% -- for those members of Congress and senators who would like to be re-elected, it's politically easier to cut Social Security, Medicare, or Food Stamps expenditures than to welch on their bargain with major donors.

So it would be politically unrealistic to suggest Congress turn off the spigot.

What, then, should be their "Step One"?

It needs to be something that takes not one dime from America's biggest corporations and wealthiest campaign donors. It's simple, really. Just ask the Congressional Budget Office and IRS to first, identify all the special interest tax breaks throughout the Internal Revenue Code that those campaign donors have paid lobbyists to obtain for them. Some may benefit a single individual or company, others an entire industry, or perhaps all businesses. Don't worry at this point about the other systems for passing taxpayers' money to the bottom line of for-profit enterprises -- the subsidies, price supports, government contracts, public land, bailouts, or tariffs mentioned above. Just look for the specially designed tax provisions that reduce what would otherwise be the beneficiaries' tax liability.

Do not reduce the benefit -- for now. Just take that list of tax benefits out of that darkened, locked lower left hand desk drawer, and put it under the light on the table. Identify the beneficiaries. Identify as accurately as possible the dollar benefit each receives from their special tax break.

Publish a document in hard copy and online containing this information. Hold a news conference to explain it to journalists and bloggers.

That's all. You want to know what is "Step One"? That's Step One.

There's an accompanying reading assignment that goes with this lesson: Christopher Rowland, "Tax lobbyists help businesses reap windfalls; While Congress fights over ways to cut spending and the deficit, generous breaks for corporations pass with little notice," The Boston Globe, March 17, 2013.

The Gazette's Erin Jordan has already brought this approach to Iowa's sales tax. Erin Jordan, "Report: Iowa lost $3.9 billion in sales tax breaks in 2010; Breaks up 62 percent since 2005," The Gazette, March 23, 2013.

And I, among others, have written about the results of the same approach being applied locally in the form of TIFs. Nicholas Johnson, "Like Death and Taxes, TIFs and TIFing Seem Here to Stay," Iowa City Press-Citizen, February 3, 2013, p. A7, embedded in "Tough TIF Talk," February 3, 2013. For links to a sampling of many other prior TIF discussions, including the text of a column and blog entry regarding the taxpayer subsidy of a previous Moen project, along with footnote documentation, see "TIF Towers; Giving TIFs the Sniff Test," April 9, 2012 (which includes Nicholas Johnson, "Moen TIF Proposal Just Doesn't Pass the 'Sniff Test,'" Iowa City Press-Citizen, April 5, 2012, p. A7).

Illustrative excerpts from Rowland's article:

"Lobbying for special tax treatment produced a spectacular return for Whirlpool Corp., courtesy of Congress and those who pay the bills, the American taxpayers.

By investing just $1.8 million over two years in payments for Washington lobbyists, Whirlpool secured the renewal of lucrative energy tax credits for making high-efficiency appliances that it estimates will be worth a combined $120 million for 2012 and 2013. . . .

The return on that lobbying investment: about 6,700 percent.

These are the sort of returns . . . the sorts of payoffs typically reserved for gamblers and gold miners. . . .

"It’s not about tax policy, it’s about benefiting the political class and the well-connected and the well-heeled in this country," said Senator Tom Coburn of Oklahoma. . . .

A smorgasbord of 43 business and energy tax breaks, collectively worth $67 billion this year, was packed into the emergency tax legislation that avoided the so-called “fiscal cliff.’’ . . .

Whirlpool officials said the tax breaks help the company retain jobs, but in recent years, it has closed refrigerator manufacturing plants in Indiana and Arkansas. . . .

In the absence of meaningful change, corporations like Whirlpool continue to pursue the exponential returns available from tax lobbying. The number of companies disclosing lobbying activity on tax issues rose 56 percent to 1,868 in 2012, up from 1,200 in 1998 . . ..

Whirlpool had plenty of company on New Year’s, including multinational corporations with offshore investment earnings, Hollywood companies that shoot films in the United States, railroads that invest in track maintenance, sellers of energy produced by windmills and solar panels, and producers of electric motorcycles.

Their special treatment is a fraction of a broader constellation of what the federal Joint Committee on Taxation estimates will be $154 billion in special corporate tax breaks in 2013, contained in 135 individual provisions of the tax code.

Note: The two reasons the "return on investment" reported by Rowland is different from my 1996 projections are that (1) he is reporting only what the companies pay their lobbyists, not all of their political expenses (most of which, for many companies, are the campaign contributions), and (2) he is only talking about the payback in tax breaks, thereby excluding the trillions of dollars over 10 years paid to corporations through the other funnels described above.

Rowland was recently a guest on Tom Ashbrook's "On Point" program. If you'd like to listen to the two of them, and others, discuss the issues, here's access to that audio: "Big Corporations Lobbying for Big Tax Breaks," March 19, 2013.

When it comes to politicians transferring taxpayers' money to for-profit companies (much of the time in exchange for campaign contributions), the practices and consequences are similar, whether it's local TIFs, state sales taxes, or federal corporate income tax special treatment. The first steps to reform are also similar: public disclosure of what's going on. How much money is at stake? Who's getting it? Why; based on what rationale? And ideally, in exchange for what (in the form of campaign contributions and lobbying activities)? Once all of that is well known, by the public, the media -- and the legislators themselves -- if the public finds it acceptable, well, that's democracy for you. But the public cannot even address the question so long as it's in the form of essentially invisible tax breaks rather than debated appropriations of giveaways openly arrived at.

If only Congress' journey of a thousand miles could begin with this single step.

# # #

Awash in Advertising

February 5, 2012, 11:20 a.m.

Manipulating Us Into Buying
Poor Quality Products We Don't Need,
With Money We Don't Have,
To Impress People We Don't Like
It's Super Bowl Sunday, February 5, 2012. "Only a game"? You've got to be kidding. It's the top rated TV show of the year; an advertiser's dream -- albeit an expensive one, at $3.5-4 million per 30-second message.

Indeed, our acceptance of advertising is now such that there is almost as much interest among some TV watchers in the ads as in the game.

Put "Super Bowl commercials 2012" into Google and up pop 2.2 million links to Web sites.

When I was a kid you could earn money by walking around town carrying advertising boards front and back. The companies paid you to advertise their products. Today's kids stand in line, willingly paying the companies extra, for the privilege of possessing goods carrying the companies' logos.

Shirts, pants, shoes, hats, drinking cups, backpacks are sought, and proudly worn or carried, because of the ads.

Advertising has entered the schools, from the ill-fated TV commercials on "Channel One," to wall posters, to event programs, to scoreboards. Colleges find no conflict in forbidding athletes to bet on games, while running ads for gambling casinos on the scoreboard; or bemoaning students' binge drinking, while profiting from the beer ads during those televised games. I have a law school colleague who has jokingly suggested we use advertising revenue to reduce tuition by including, say, a "Microsoft Minute" at the beginning of each class period. (I suspect that some day it will no longer be considered a joke.)

It's still possible to be paid for wearing advertising -- if you're a NASCAR driver . . .
















. . . , or a college football or basketball coach who can put a Nike swish on every player's uniform.

There are even those, among whom I have included myself on occasion, who believe that public officials should not only be permitted, but required, to wear the corporate logos of those who fund their campaigns. Not everyone bothers to read, let alone understand, campaign contribution disclosure reports. A more meaningful form of "public disclosure," immediately apparent when they appear on television or at public events, would be to require of them the same honest disclosure that NASCAR drivers impose on themselves -- like this:



With the Supreme Court's Citizens United decision, and other opinions appearing to take the corporate view of things, some (not I) have even advocated this approach for the justices:



While not exactly the same thing, the Oklahoma legislature has taken a rather permanent step in this direction, with corporate sponsorship of the entire state capitol building.A couple I know -- whose known hobbies include biking across the country, world championship poker playing, high class public service, and European travel -- also include a nearly-completed goal of visiting every state capital in the 50 states. A recent trip included Oklahoma City and the Oklahoma State Capitol building -- and its backyard oil well.

Much to their surprise and mine, inside the dome, around the base, are inscribed the names of the corporations that hold up the building (and perhaps its occupants and the taxpayers as well).

The only name on display in this picture is "Hobby Lobby Stores" (no pun intended), but I was assured the names continue around the entire base.

If it's worth $3.5-4 million for a 30-second commercial on a super bowl game, imagine what it would be worth to have your corporation's name enshrined forever inside the capitol dome of the national capitol building in Washington -- or even your state capitol building. Future generations of visiting school children and your potential customers could look upwards toward the heavens, see your name and logo, and give thanks for what you've contributed to making ours the best government money can buy.
# # #

What Brazil Can Teach America

August 4, 2011, 10:00 a.m.

America, There Is Another Way
Things aren't looking really good for America right now. And, frankly, I don't see a way out.

Our answers are obvious. What appears to be even more obvious is that we're apparently not going to choose any of them.

If we can't learn from our mistakes, or from others' success, at least it may be psychologically palliative to know about, and watch, other countries' progress and know that darkness is not covering the entire world.

As I have written here repeatedly, it seems so obvious that in an economy 70% driven by consumer spending it does little good to ask CEOs to build more plant and hire more workers when consumers aren't prepared to buy what's already stored in warehouses. With true un- and under-employment running closer to 20% than 9%, and some population sectors (e.g., black, male, high school dropouts) running over 50%, even those with jobs fear they may lose them, and those with job security are still shaky about their financial future (e.g., galloping inflation; global depression).

What we should have done three years ago was apply a lesson from the New Deal depression recovery: make the federal government the employer of last resort (e.g., WPA and CCC). That would have put money in the pockets of those who would have spent it, and helped restore the confidence of the rest of us as well. Gradually, as they spent, and the rest of us followed, it would have become rational for CEOs to increase production -- and hiring, moving the employed from federal to private payrolls.

Of course, now that the trillions have been given to Goldman Sachs' and other executives among the over-privileged employed, those who fear that we really can't go on spending billions and trillions on additional "stimulus" programs have a point.

That's why I don't see a way out -- especially given the financial problems confronting Greece, Spain and Italy, among others, as well. It's now impacting even China, since the rest of us have less with which to buy even China's production.

Many of our public officials have proven themselves to be either ignorant, incompetent, or venal. Clearly they can't either govern or be governed. (One is reminded of the adage "Lead, follow, or get out of the way" -- given that none of those options seem acceptable to them.) They seem prepared to see American fall further rather than "compromise" an emotionally held ideological mantra. See, e.g., "When Obstruction Becomes Treason," July 30, 2011.

So while we sit and wait for the final boot to fall, I find some satisfaction in Brazil, and its example that there is another way.

Here are some relevant fair use excerpts from a segment on last Sunday's [July 31, 2011] CBS' "60 Minutes" program -- "Brazil: The World's Next Economic Superpower?" -- followed by some comments from me.

While most of the world is consumed with debt and unemployment, Brazil is trying to figure out how to manage an economic boom. As we first reported last December, it was the last country to enter the Great Recession, the first to leave it, and is now poised to overtake France and Britain as the world's fifth largest economy. . . .

Brazilian tycoons like Eike Batista, who has . . . a net worth of $27 billion . . . said, "GDP-wise, we are bigger than all the other countries [in South America] together. . . .."

With most of the world's economies stagnant, Brazil's grew at 7 percent last year, three times faster than America. It is a huge country, slightly larger than the continental U.S., with vast expanses of arable farmland, an abundance of natural resources, and 14 percent of the world's fresh water.

Eighty percent of its electricity comes from hydropower, it has the most sophisticated bio fuels industry in the world, and for its size, the world's greenest economy. Brazil is already the largest producer of iron ore in the world, and the world's leading exporter of beef, chicken, orange juice, sugar, coffee and tobacco -- much of it bound for China, which has replaced the U.S. as Brazil's leading trade partner. . . .

Batista, who has interests in mining, transportation, oil and gas, is building a huge super-port complex north of Rio with Chinese investment. The complex will accommodate the world's largest tankers and speed delivery of iron ore and other resources to Asia.

But it's not just commodities that are driving the Brazilian boom. The country has a substantial manufacturing base and a large auto industry. Aviation giant Embraer is the world's third-largest aircraft manufacturer, behind Boeing and Airbus and a main supplier of regional jets to the U.S. market. . . .

"We have to create more engineers," he told Kroft. "In my oil company, I'm importing Americans to weld our platforms, just to give you an, an idea."

"To weld the platforms?" Kroft asked.

"Yes," Batista said. "There's a lack of welders. We are walking into a phase of almost full employment. Already we have created this year 1.5 million jobs. It's unbelievable." . . .

President Luiz Inácio Lula da Silva walked into the president's office. . . .

When he was elected eight years ago on his fourth try, Lula was a firebrand labor leader with socialist tendencies. Some predicted another Hugo Chavez.

But he left office at the end of last year with an 87 percent approval rating and much of the credit for turning the country around. . . .

Lula [said], "Look, every once in awhile I joke that a metal worker with a socialist background had to become president of Brazil to make capitalism work here. . . .."

He added, "If you look at the banks' balance sheets for this year, you will see that the banks have never made so much money in Brazil as they have during my government. The big companies have never sold as many cars as they have during my government, but the workers have also made money."

So how has he managed to do that?

Lula told Kroft he has "found out something amazing."

"The success of an elected official is in the art of doing what is obvious," Lula said. "It is what everyone knows needs to be done but some insist on doing differently."

One thing obvious to Lula was the social and economic chasm separating Brazil's rich and poor. He gave the poor families a monthly stipend of $115, just for sending their children to school and taking them to doctors.

The infusion of cash helped lift 21 million people out of poverty and into the lower middle class, creating an untapped market for first-time buyers of refrigerators and cars.

But he was also far friendlier to business than anyone expected. Lula encouraged growth and development, and maintained conservative fiscal policies and tight banking regulations that left Brazil unscathed by the world financial crisis. . . .

[E]conomists from Goldman Sachs no less are predicting that Brazil - along with Russia, China and India - will dominate the world economy in the 21st century.

If it happens, Brazil would be a different kind of superpower, one that would rather make love not war. It has no nuclear arsenal, and aside from contributing a small number of troops to the allied cause in 1944, Brazil hasn't fought a war since 1870.

"Why fight?" Batista asked. "With all the pleasures, beach and sun. War? Forget it. Soccer? Let's watch a soccer game. Let's go to the beach. Let's drink a beer."

So what lessons does Brazil offer America? Here are a few from my perspective.

How can we explain why Brazil is enjoying an "economic boom" and was "the last country to enter the Great Recession, the first to leave it, and is now poised to overtake France and Britain as the world's fifth largest economy" -- and we were not?

Why was it that Brazil's economy "grew at 7 percent last year, three times faster than America"?

Environmental initiatives. Did you notice the line that, "Eighty percent of its electricity comes from hydropower, it has the most sophisticated bio fuels industry in the world, and for its size, the world's greenest economy"? Our public officials, responsive to the campaign contributions, lobbying and other pressures from special interests, such as the oil industry, have failed to seize our opportunity to wean ourselves from fossil fuels. Brazil has figured out a way to fuel its cars with ethanol while still producing food for export.

Manufacturing base. Note that, Brazil "has a substantial manufacturing base and a large auto industry. Aviation giant Embraer is the world's third-largest aircraft manufacturer, behind Boeing and Airbus and a main supplier of regional jets to the U.S. market. . . ." We've largely abandoned our manufacturing, and the jobs it provided, letting American corporations profit by outsourcing and building plants overseas. As a result, Brazil has "created this year 1.5 million jobs" and is "walking into a phase of almost full employment." Meanwhile our government, while turning its back on the obvious solution of creating federal jobs for the unemployed, is bemoaning our 20% actual unemployment.

Economic recovery means supporting the poor. Some of our political leaders have as their primary mission (after making sure President Obama fails as a president and is limited to one term) the reduction or elimination of government itself, and everyone seemingly runs and hides at the mere whisper of the word "socialism." By contrast, Brazilians were not only willing to elect an confessed socialist, they -- including most of the Brazilian business community -- now give him 87% approval ratings.

"The success of an elected official is in the art of doing what is obvious," Lula said. "It is what everyone knows needs to be done but some insist on doing differently."

One thing obvious to Lula was the social and economic chasm separating Brazil's rich and poor. He gave the poor families a monthly stipend of $115, just for sending their children to school and taking them to doctors.

The infusion of cash helped lift 21 million people out of poverty and into the lower middle class, creating an untapped market for first-time buyers of refrigerators and cars.

This approach appeals to me, of course, because it demonstrates the success of precisely what I have been arguing; the solutions to our problems are available, we just need to be "doing what is obvious" that our majority "insist on dong differently."

Henry Ford, no socialist, knew that his success depended on his pricing his cars, and paying his workers, such that the workers could afford to buy the cars they were building.

Like Lula's Brazil we, too, need to recognize, and do something about, "the social and economic chasm separating [our] rich and poor." To stimulate an economy you need to give more money to the poor, not to the rich. Brazil proves it. By lifting "million[s of] people out of poverty and into the lower middle class, [we, too, could create] an untapped market for first-time buyers of refrigerators and cars" and pull our economy out of economic malaise in short order. That it is also a humane thing to do is an added benefit for those who care about such things.

Government regulation can be our friend. One of the consequences of our "best government that money can buy" is that workers die on offshore oil rigs that pollute the Gulf, and in coal mines that have been documented as unsafe, and Wall Street is permitted to profit while bringing down the global economy.

How did Lulu deal with that phenomenon? Was he hostile to business? Not at all. "[H]e was also far friendlier to business than anyone expected. Lula encouraged growth and development . . .." However, and this is the big difference, he also "maintained conservative fiscal policies and tight banking regulations that left Brazil unscathed by the world financial crisis. . . ." When we permit special interests to buy a substitution of "self-regulation" in place of rational regulation, as we do, people die and economies collapse. Lulu knew better than to permit that to happen. Why don't we?

As a result, now even the "masters of the universe," "[E]conomists from Goldman Sachs no less are predicting that Brazil - along with Russia, China and India - will dominate the world economy in the 21st century."

The true cost of military budgets. Finally, it is no accident that Switzerland and Brazil are among the most solid economies in the world. What am I talking about? We pay a price, an enormous and debilitating price, for our insistence on being, not only the strongest military power in the world, but one that spends more than the next ten nations combined.

What does Brazil do?

"Brazil . . . would rather make love not war. It has no nuclear arsenal, and aside from contributing a small number of troops to the allied cause in 1944, Brazil hasn't fought a war since 1870. "Why fight?" Batista asked. "With all the pleasures, beach and sun. War? Forget it. Soccer? Let's watch a soccer game. Let's go to the beach. Let's drink a beer."

Some final words. You see? That's what we could have been doing. We knowingly and deliberately chose not to. We chose to borrow 40% of what we spend. We chose to maintain three ongoing wars, and a military presence in 150 countries. We chose not to create a level playing field for third parties, or provide public financing of campaigns. We chose to run from anything that might be labeled socialism. We chose not to tax ourselves, and especially not our wealthiest.

We chose to become a third world country in which the richest 1% control 90% of the wealth. We chose to watch video games, computer screens, smart phones and TV rather than march in the streets in protest.

Finding ourselves in a hole, we chose to go on digging.

Rather than sucking it up and doing what needs to be done, we're still kicking the can down the road.

It's been fun. But it's no fun anymore.

Have a nice day.

Like to watch the entire segment? Here it is:


# # #

Governor Branstad's 'Transparency'

January 5, 2011, 7:00 a.m.

Making "Transparency" in Government Meaningful
(bought to you by FromDC2Iowa.blogspot.com*)
The Press-Citizen has requested and run a series of 500-word op ed columns on "Issues to Watch: State Government." Here's mine from this morning's paper on Governor Terry Branstad's promises of "transparency."

Branstad and Public Transparency
Nicholas Johnson
Iowa City Press-Citizen
January 5, 2011, p. A7
Governor-elect Terry Branstad thinks transparency in government is a good idea.

As a general proposition, most agree. Indeed, to borrow from the bumper sticker: "It's not just a good idea; it's the law."

The difficulties come, not from the generalization, but from the specific applications and exceptions. Moreover, many public officials are unaware of their obligations.

It's called the Freedom of "Information" Act. However, as communications scholars remind us, there are dramatic differences between data, information, knowledge and wisdom. Without raw data nothing more is possible. Wisdom may be too much to hope for, let alone legislate. But it's knowledge that we need.

Few citizens rummage through the yellowing paper records in all of Iowa's 99 county courthouses. We depend on the media to tell us what our public officials are up to -- from Congress in Washington, to agencies in Des Moines, to the local school board.

Too often, public records, even with the media's reporting, provide us little more than data.

Do Iowans really want government transparency, a "government in the sunshine"? If so, we need to follow the advice "Deep Throat" gave Bob Woodward and Carl Bernstein, the Washington Post's Watergate break-in reporters: "Follow the money."

Much of what governments do is transfer taxpayers' money to the bottom line of for-profit corporations. Indeed, my research indicates the payback on large campaign contributions can run 1,000-to-one, or more. In Washington that means, "Give a million, get a billion." What's the ratio in Des Moines?

Paybacks can take the form of government contracts, price supports, direct subsidies and earmarks, and fraudulently named "jobs" and "economic development" programs. One of the most invisible and invidious forms of payback are "tax breaks."

There are serious issues of political ideology, public policy and finance when officials hand over taxes to for-profit corporations. One would hope those who think "socialism" is a swear word, and insist a deregulated marketplace solves all social ills, would oppose such giveaways. One would hope in vain.

So let's put those issues aside, recognize the corruption will continue, and address what improvements might help.

• First, recognize that $100,000 not paid in taxes has the same private benefit and public cost as a $100,000 corporate subsidy.

• Second, without cutting a single dollar from the taxpayers' largess put all the money on the table. Start with the worst problem: the virtually invisible and untraceable tax breaks.

• Third, identify those that exist, however deeply buried in the Iowa tax code, and repeal them.

• Fourth, make the money available, to the same recipient in the same amount, but as an identifiable appropriation for a named corporation or individual.

• Fifth, require reports, and encourage media presentation of them, that associate those appropriations with the legislators who voted for them, and how much those legislators received in campaign contributions and lobbying expenses from the recipient of the appropriation.

That's how you turn data and information into knowledge.

It remains to be seen if that's what Branstad means by "transparency."

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Nicholas Johnson, a former FCC commissioner, teaches at the University of Iowa College of Law and maintains www.nicholasjohnson.org and FromDC2Iowa.blogspot.com.

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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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Sarah Ferguson for Senate

May 24, 2010, 6:25 a.m.
[For BP disaster see, "Obama As Finger-Pointer-In-Chief," May 18, 2010; "Big Oil + Big Corruption = Big Mess," May 10, 2010; "P&L: Public Loss From Private Profit," May 3, 2010.]

What's Scandal in London is SOP in Washington
Just Business -- As Usual
(bought to you by FromDC2Iowa.blogspot.com*)
Sarah Ferguson has stepped in it again.

But is what she did any different from what goes on in Washington every day?

In case you missed the story, Sarah Ferguson married Prince Andrew, Queen Elizabeth's second son, the Duke of York, in 1986, making her a member of the Royal Family as the Duchess of York. They were divorced in 1996.

Her judgment has not always been the best. Indeed, as The Guardian puts it, "The duchess . . . has a long history of excruciating misjudgments and has been in financial difficulties for some time. Her most notorious escapade occurred when she was pictured on a yacht, while still married, having her toes sucked by her then financial adviser Johnny Bryant." Stephen Bates, "Sarah Ferguson offered access to Prince Andrew for cash, says tabloid; Duchess of York allegedly caught on film demanding £500,000 in order to 'open doors' for reporter posing as businessman," The Guardian, May 23, 2010.

So, what's she done now? As The Guardian story continues,

[S]he was exposed by a News of the World sting operation in which she promised to obtain access to her former husband in return for £500,000. [Photo Credit: News of the World.]

In probably her most personally damaging mistake throughout a somewhat gaffe-strewn career, the Duchess of York appears to have fallen for the Sunday newspaper's undercover reporter Mazher Mahmood, who specialises in exposés. . . .

In a taped interview . . . the duchess is seen telling the man she supposed was a foreign businessman that she could obtain access for him to the prince, who acts as a quasi-official British trade envoy promoting deals for UK firms around the world.

Demanding a payment of £500,000 . . . she told the reporter: 'That opens up everything you would ever wish for. I can open any door you want, and I will for you. Look after me and he'll look after you … you'll get it back tenfold.'"

Shocking! Scandalous! An embarrassment to the Royal Family, to the Duke and former Duchess of York, to all Brits who revel in the monarchy.

And then I got to thinking.

Why is it that we don't consider what is going on in Washington, even while you read this, equally shocking and scandalous?

What am I talking about?

Think about it. How do our elected officials justify their receipt of five-to-seven-figure cash contributions from those who stand to benefit (or lose) from those officials' votes and interventions in government decisions (e.g., softening safety standards for offshore drilling, coal mines, workplaces generally, multi-billion-dollar "bailouts")? Why is that not considered the buying of votes? Why do we not call it "bribery," and prosecute it as a criminal offense?

Because, say our officials (and those who collect the money for them), "No one can buy my vote with a 'campaign contribution.'"

So, then, we sometimes ask, "Why do your donors give you such large amounts of money, and spend equally large amounts on lobbyists?"

"Oh," say the officials, "all they want, and all they get, is 'access;' the ability to tell me their story directly."

Put aside your cynicism for a moment. Let us assume, even if it doesn't pass the laugh test, that campaign contributions don't sway votes as such; that all they purchase is the opportunity for "access."

Is that valuable? How much is "access" worth? Ask Sarah Ferguson. She runs in those circles. She has a pretty good sense of its market value. In this instance she thought it worth $700,000.

In Washington, some have paid more, some have paid less.

All have found it a worthwhile investment, even if all it got them was "access."

Because in the "pay to play" town that Washington has become, you're likely to find the committee chair, or senator, you need to talk to about your business is "too busy" to see you without your first coming up with what Sarah Ferguson was demanding.

In London, promises Ms. Ferguson, "you'll get it back tenfold." In Washington, the return on a campaign contribution "investment" runs closer to 1000-to-one. Give a million, get a billion. (See supporting data at Nicholas Johnson, "Campaigns: You Pay $4 or $4000," Des Moines Register, July 21, 1996, p. C2.

Yet in London a 10-to-one return is a scandal. And in Washington a 1000-to-one return is just "business -- as usual."

There are going to be some Senate seats open this year. If only she'd thought to come here and run for one of them. More money; no scandal. Oh, well. Maybe next time.
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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Big Oil + Big Corruption = Big Mess

May 10, 2010, 8:45 a.m.

[If you're looking for the 12 prior blog entries about the ICCSD superintendent search see, "The Beat Goes On, But Music's Out of Tune," May 1, 2010, and 11 items linked from "Superintendent Murley's Calm Seas, Smooth Sailing," April 29, 2010. If you're interested in the ICCSD redrawing school boundary lines fiasco see, "School Boundaries: There Are Better Ways," April 16, 2010, with links to 23 related, prior blog entries and other writing.]

Connecting Those Slippery, Oily Dots
(brought to you by FromDC2Iowa.blogspot.com*)
Update: May 14: A couple of the most shocking stories yet (corporate-government silencing scientists, suppressing data): Justin Gillis, "Size of Oil Spill Underestimated, Scientists Say," New York Times, May 14, 2010, p. A1; Ian Urbina, "U.S. Said to Allow Drilling Without Needed Permits," New York Times, May 14, 2010, p. A1 ("The [MMS] gave permission to BP and dozens of other oil companies to drill in the Gulf of Mexico without first getting required permits . . . despite strong warnings . . . about the impact the drilling was likely to have . . . [and] routinely overruled its staff biologists and engineers who raised concerns . . ..").

Update: May 12: Editorial, "The Oil Industry Doesn't Step Up," New York Times, May 12, 2010, p. A24; John M. Broder, "U.S. to Split Up Agency Policing the Oil Industry," New York Times, May 12, 2010, p. A1; Editorial, "Raise Liability Cap for Oil Companies," Des Moines Register, May 12, 2010; Matthew L. Wald, "Live-Blogging the Senate Hearing on Offshore Drilling," New York Times/Green, May 11, 2010.

Update, May 11: "MMS Approved 27 Gulf Drilling Operations After BP Disaster; 26 Were Exempted From Environmental Review, Including Two to BP; Salazar's "Moratorium" on New Drilling Permits Allows Continuation of the Same Flawed Environmental Exemption Process that Allowed the BP Catastrophe," Center for Biological Diversity, May 7, 2010 ("Even as the BP drilling explosion which killed eleven people continues to gush hundreds of thousands of gallons of oil per day into the Gulf of Mexico, the U.S. Department of Interior’s Minerals Management Service (MMS) has continued to exempt dangerous new drilling operations from environmental review. Twenty-seven new offshore drilling projects have been approved since April 20, 2010; twenty-six under the same environmental review exemption used to approve the disastrous BP drilling that is fouling the Gulf and its wildlife. “The MMS has learned absolutely nothing from this national catastrophe,” said Kierán Suckling, executive director of the Center for Biological Diversity, “It is still illegally exempting dangerous offshore drilling projects in the Gulf of Mexico from all environmental review. It is outrageous and unacceptable.”).

And see the recent, related, "P&L: Public Loss From Private Profit," May 3, 2010.
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The details of one of the most devastating environmental disasters in American history on fish, wildlife and beaches is not the most important story.

The details of the technology that permits drilling for oil a mile beneath the ocean's surface -- and that fails us when that drilling goes awry -- is not the most important story.

The tragic sacrifice of workers' lives -- 11 on the Deepwater Horizon (plus 29 in the Massey Coal mine) -- to the profits of their corporate employers with "cost savings" on inadequate and malfunctioning safety technology is not the most important story.

The response of suddenly get-tough-on-oil senators and members of Congress, and what the investigations may ultimately reveal (or conceal), is not the most important story.

The newspaper and television coverage of the oil disaster is not the most important story.

All of the above are mere diversions from the most important story.

The most important story? The extent to which America's officials -- and the public, let it be noted -- have permitted major corporations' campaign contributions, lobbying, public relations, advertising, and other influence to corrupt our nation's ability to formulate, and enforce, policies that would best serve "the national interest."

We're generally aware of the extent to which Goldman Sachs alums have infiltrated the government, from the Fed to the Treasury to the White House itself, and how they influence Congress. See, e.g., the summary in Alex Floum, "Goldman Sachs alumni hold many of the top government positions," Economic Policy Examiner, May 6, 2010; Albert R. Hunt, "Scarlet Letter for the Greed Generation," New York Times, April 25, 2010 ("Goldman’s political action committee gave $290,500 to congressional candidates last month as Congress weighed the financial-regulation overhaul. Mr. Obama shook the Goldman Sachs money tree for almost $1 million in his presidential campaign.").

We are perhaps less well informed and aware of the extent to which many industries exert similar influence over governmental decision making as well.

So let us consider the case study of BP.

From the West Coast to the Gulf Coast
This picture is so revealing. [Photo credit: UC Berkeley Media Relations] The caption reads, "Backstage before the announcement, UC President Robert Dynes (right) flashes 'thumbs up' to BP America chairman Robert Malone . . .."

"The announcement." "What announcement?" I hear you ask. The announcement that BP is going to give UC Berkeley (my first post-clerkship employer) $500 million.

Global energy firm BP announced today (Thursday, Feb. 1 [2007]) that it has selected the University of California, Berkeley, in partnership with Lawrence Berkeley National Laboratory (LBNL) . . . to lead an unprecedented $500 million research effort to develop new sources of energy and reduce the impact of energy consumption on the environment. . . .

"This partnership with BP will develop new, sustainable energy technologies that can transform the landscape," said Nobel Laureate Steven Chu, director of LBNL — a U.S. Department of Energy-funded lab — and UC Berkeley professor of physics and of molecular and cell biology.

Robert Sanders, "BP Selects UC Berkeley to Lead $500 Million Energy Research Consortium," UC Berkeley News, February 1, 2007.

Why is this story relevant? Well, for starters it is an illustration of the fact that the tentacles of a multi-billion-dollar corporation like BP extend into far more major American institutions than just the federal government -- especially the large, prestigious, research universities.

It also makes the point that when you're in a position to hand out money in $500 million bundles you tend to get a thumbs up from everyone you meet -- including presidents and members of Congress.

How can a company afford to make $500 million contributions? BP's first quarter profits were $5.6 billion; that's profits, not revenue, which is of course much greater; and not annual profits, but three months' worth of profits.

But there's more. Just as occasionally when you drill you strike oil, so occasionally when you pay $500 million for favorable public relations (BP was trying to sell the public on the idea that BP no longer stands for "British Petroleum," it now stands for "Beyond Petroleum") you strike another kind of oil.

And so it was with their beneficence spread upon Professor Chu. Do you know where he is now? That's right, President Obama decided he would make a great Secretary of Energy -- the guy who's supposed to be helping us overcome our oil addiction.

And what did he have to say recently about the BP oil spill disaster?

"U.S. Energy Secretary Steven Chu said Wednesday it was not a mistake for the administration to support more offshore drilling as part of comprehensive energy reform, despite the oil rig spill in the Gulf of Mexico that continues to threaten coastal areas." John Wihbey, "Energy Sec. Steven Chu: More Drilling Proposal 'Not a Mistake,'” "On Point with Tom Ashbrook"/WBUR/NPR, May 5, 2010.

Spreading Money Like Oil
But it's BP's generosity with members of Congress that may have even more to do with its disaster in the Gulf than its generosity with Energy Secretary Chu. After all, the pollution of the Gulf is primarily the responsibility of the Secretary of the Interior, not the Secretary of Energy.

Oil behemoth BP poured millions of dollars into lobbying and campaign contributions over the past two decades, courting allies in Congress and the White House. . . . BP paid $6.2 million in campaign contributions since 1990, landing on the list of 107 "heavy hitters" compiled by the Center for Responsive Politics.

The company's political action committee has helped the re-election efforts of many . . ..

And that's just part of BP's political spending.

Just in the past year, BP doled out nearly $16 million for influence efforts, using both its own lobbyists and those with eight other firms . . ..

Anne C. Mulkern, "Big Contributor BP Finds Itself Without a Friend on the Hill," New York Times/Greenwire, May 4, 2010; and see Bara Vaida, "K Street Paradox; Special Report: President Obama's fight against special interests boomerangs as lobbying firms just get richer," National Journal, March 13, 2010 (subscription service) ("President Obama continues to campaign against Washington's special interests, but to what effect? The more he tries to rein in lobbyists, the more K Street rakes in.").

OK, but what does that have to do with Interior Secretary Ken Salazar? Well, before he was a cabinet secretary it happens that he was a U.S. Senator -- a senator who served just shy of one term.

Having not yet been a senator for a full term, Ken Salazar (D-Colo.) [who] hasn't had much time to collect money from the industries that will take a special interest in him as Secretary of the Interior . . . . has collected a total of $321,800 from the energy and natural resources sector during his short time in the Senate . . ..

Lindsay Renick Mayer, "Interior Motives," Open Secrets, December 16, 2008.

And what was his record as a Senator? His Wikipedia entry reports that,

In 2005, Salazar voted against increasing fuel-efficiency standards (CAFE) for cars and trucks . . . [and] against an amendment to repeal tax breaks for ExxonMobil and other major petroleum companies. . . .

In 2006, Salazar voted to end protections that limit offshore oil drilling in Florida's Gulf Coast.

In 2007, Salazar was one of only a handful of Democrats to vote against a bill that would require the United States Army Corps of Engineers to consider global warming when planning water projects.

"Ken Salazar," Wikipedia.

So we shouldn't be surprised with Paul Krugman's reminder this morning that "environmentalists were bitterly disappointed when Mr. Obama chose Ken Salazar as secretary of the interior. They feared that he would be too friendly to mineral and agricultural interests, that his appointment meant that there wouldn’t be a sharp break with Bush-era policies — and in this one instance at least, they seem to have been right." Paul Krugman, "Sex and Drugs and the Spill," New York Times, May 10, 2010, p. A23.

Regulators Make Strange Bedfellows
And so what role did President Obama's Secretary of the Interior play in bringing on this Gulf disaster?

The Interior Department exempted BP's calamitous Gulf of Mexico drilling operation from a detailed environmental impact analysis last year, according to government documents . . . [as a result of] [t]he decision by the department's Minerals Management Service (MMS) to give BP's lease at Deepwater Horizon a "categorical exclusion" from the National Environmental Policy Act (NEPA) on April 6, 2009 -- and BP's lobbying efforts just 11 days before the explosion to expand those exemptions . . ..

"I'm of the opinion that boosterism breeds complacency and complacency breeds disaster," said Rep. Edward J. Markey (D-Mass.) on Tuesday. "That, in my opinion, is what happened." . . .

While the MMS assessed the environmental impact of drilling in the central and western Gulf of Mexico on three occasions in 2007 -- including a specific evaluation of BP's Lease 206 at Deepwater Horizon -- in each case it played down the prospect of a major blowout.

In one assessment, the agency estimated that "a large oil spill" from a platform would not exceed a total of 1,500 barrels and that a "deepwater spill," occurring "offshore of the inner Continental shelf," would not reach the coast. In another assessment, it defined the most likely large spill as totaling 4,600 barrels and forecast that it would largely dissipate within 10 days and would be unlikely to make landfall.

"They never did an analysis that took into account what turns out to be the very real possibility of a serious spill," said Holly Doremus, a law professor at the University of California at Berkeley who has reviewed the documents.

The MMS mandates that companies drilling in some areas identify under NEPA what could reduce a project's environmental impact. But Interior Department spokesman Matt Lee-Ashley said the service grants between 250 and 400 waivers a year for Gulf of Mexico projects. He added that Interior has now established the "first ever" board to examine safety procedures for offshore drilling. It will report back within 30 days on BP's oil spill and will conduct "a broader review of safety issues," Lee-Ashley said.

BP's exploration plan for Lease 206 [Deepwater Horizon], which calls the prospect of an oil spill "unlikely," stated that "no mitigation measures other than those required by regulation and BP policy will be employed to avoid, diminish or eliminate potential impacts on environmental resources."

[T]he plan . . . minimized the prospect of any serious damage associated with a spill, saying there would be only "sub-lethal" effects on fish and marine mammals, and "birds could become oiled. However it is unlikely that an accidental oil spill would occur from the proposed activities."

Kierán Suckling, executive director of the environmental group Center for Biological Diversity, said the federal waiver "put BP entirely in control" of the way it conducted its drilling.

Agency a 'rubber stamp'

"The agency's oversight role has devolved to little more than rubber-stamping British Petroleum's self-serving drilling plans," Suckling said.

BP has lobbied the White House Council on Environmental Quality -- which provides NEPA guidance for all federal agencies -- to provide categorical exemptions more often. In an April 9 letter, BP America's senior federal affairs director, Margaret D. Laney, wrote to the council that such exemptions should be used in situations where environmental damage is likely to be "minimal or non-existent." An expansion in these waivers would help "avoid unnecessary paperwork and time delays," she added.

Juliet Eilperin, "U.S. exempted BP's Gulf of Mexico drilling from environmental impact study," Washington Post, May 5, 2010.

The disaster was predictable. Why predictable? Consider the record:

The 2005 explosion at a refinery in Texas City, Tex., killed 15 workers and injured hundreds more. The Occupational Safety and Health Administration fined BP a record $87 million for neglecting to correct safety violations.

Only a year later, a leaky BP oil pipeline in Alaska forced the shutdown of one of the nation’s biggest oil fields. BP was fined $20 million in criminal penalties after prosecutors said the company had neglected corroding pipelines. . . .

Last year, when the federal Minerals Management Service proposed a rule that would have required companies to have their safety and environmental management programs audited once every three years, BP and other companies objected. The agency is also investigating charges by a whistle-blower that the company discarded important records from its Atlantis Gulf platform.

Clifford Krauss, "Oil Spill’s Blow to BP’s Image May Eclipse Costs," New York Times, April 30, 2010; and see additional details and comparisons with other companies in Jad Mouawad, "BP Has a Record of Blasts and Oil Spills," New York Times, May 9, 2010, p. A22 ("BP, the nation’s biggest oil and gas producer, has a worse health, environment and safety record than many other major oil companies, according to Yulia Reuter, the head of the energy research team at RiskMetrics . . ..").

There are no simple answers to how an agency becomes "captured" by the industry it is supposed to regulate. But here are a couple of insights.

Regulators make strange bedfellows. You do recall the Minerals Management Service don't you? "Government officials in charge of collecting billions of dollars worth of royalties from oil and gas companies accepted gifts, steered contracts to favored clients and engaged in drug use and illicit sex with employees of the energy firms, federal investigators reported yesterday." Derek Kravitz and Mary Pat Flaherty, "Report Says Oil Agency Ran Amok; Interior Dept. Inquiry Finds Sex, Corruption," Washington Post, September 11, 2008. Noelle Straub, "GAO Audit: MMS Withheld Offshore Drilling Data, Hindered Risk Analyses in Alaska," New York Times/Greenwire, April 7, 2010 -- roughly three weeks before the current disaster.

So what? So, "The [Department of the Interior] inspector general said that these relationships have cost taxpayers $4.4 million in lapsed collection fees, but due to the sloppy administration at MMS, the real cost may go undiscovered. In a separate report, the Government Accountability Office (GAO) found that MMS is plagued by inefficiency in collecting royalties, and that there is no way to backtrack and figure out how much has actually been lost. Currently, oil companies submit their own data and MMS simply takes them at their word, rather than independently confirming that the numbers are correct — what the inspector general has referred to in a letter to Secretary Dirk Kempthorne as a “Band-Aid approach to holding together one of the federal government's largest revenue producing operations.” A separate GAO report found that the United States is not collecting fair market price for royalties on public resources — which may be seriously limiting the amount of money taken in by MMS, and hence, the taxpayers." "Broken Government," Center for Public Integrity.

These consequences are reinforced as a result of what has come to be called the "revolving door."

In trying to understand why M.M.S. fails in its fiduciary and regulatory responsibilities to taxpayers, it’s impossible to ignore the revolving door between the agency and the industry that it oversees. Since leaving government service, Gale Norton, secretary of Interior under President Bush, became Shell’s general counsel, and J. Steven Griles, a deputy secretary of Interior, lobbied for numerous oil and gas industries — including BP — before he went to jail for obstructing a Senate investigation. Randall Luthi, the most recent director of M.M.S., is now president of the National Oceans Industries Association, whose mission is to secure a “favorable regulatory and economic environment for the companies that develop the nation’s valuable offshore energy resources.” . . .

Longstanding cozy ties with industry may help explain why M.M.S. failed to bolster safety requirements for equipment and processes used on the Deepwater Horizon rig — despite internal reports giving clear warnings about the risks of these devices and techniques.

At the end of the day, this spill should show Congress that there are real harms when government regulators consider the industry they oversee to be a partner or client (or future employer) rather than an entity that they should hold accountable.

Danielle Brian and Mandy Smithberger, "Our Government, Serving the Energy Business," in Editors, "Rules, Revolving Doors and the Oil Industry," New York Times, May 5, 2010.

Oil Seepage Into the White House
In fairness to the Obama Administration, it should be noted that this "self-regulation" of offshore drilling actually began during the Clinton Administration.

"We are not supportive of the extensive, prescriptive regulations as proposed in this rule," wrote Richard Morrison, BP's vice president for Gulf of Mexico production. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs implemented since the adoption of [voluntary standards] have been and continue to be very successful." . . . The voluntary approach was adopted in 1994 during the Clinton administration.

Mike Soraghan, "BP, Other Oil Companies Opposed Effort to Stiffen Environmental, Safety Rules for Offshore Drilling," Greenwire/New York Times, April 27, 2010.

Because ultimately this rot from within government, like an under-ocean oil spill, makes its way up to the White House and the President himself. President Obama is, from all indications, a bright guy, well informed, a quick study, not easily bamboozled. So when he starts mouthing oil industry propaganda it's hard to make excuses for him -- much as I'd like to believe he was simply relying too heavily on staff members, or industry spokespersons, he thought he could trust.

And yet, there he was on March 31, announcing from Andrews Air Force Base,

[A]s we transition to cleaner energy sources, we’ve still got to make some tough decisions about opening new offshore areas for oil and gas development in ways that protect communities and protect coastlines. . . .

[T]he bottom line is this: Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.

So today we’re announcing the expansion of offshore oil and gas exploration, but in ways that balance the need to harness domestic energy resources and the need to protect America’s natural resources. Under the leadership of Secretary Salazar, we’ll employ new technologies that reduce the impact of oil exploration. We’ll protect areas that are vital to tourism, the environment, and our national security. And we’ll be guided not by political ideology, but by scientific evidence.

"Remarks by The President on Energy Security at Andrews Air Force Base," March 21, 2010.

On April 2, 2010 -- 18 days before the BP disaster -- here is what the President had to say in Charlotte, North Carolina:

[Photo credit: White House] [W]e’ve got to look at our traditional energy sources and figure out how can we use those most effectively and in the most environmentally sound way. . . .

The decision around drilling -- same approach. What we did was we said we’re not going to have drilling a mile off the North Carolina coast or two miles off. But 50 miles off, 100 miles off, where it is appropriate and environmentally sound and not risky, we should allow exploration to begin taking place to see if there’s certain reserves. . . .

But what we did was we tried to look at the scientific evidence and figure out where are areas where low risk environmentally and a high potential upside. . . .

I don’t agree with the notion that we shouldn’t do anything. It turns out, by the way, that oil rigs today generally don’t cause spills. They are technologically very advanced. Even during Katrina, the spills didn’t come from the oil rigs, they came from the refineries onshore.

"Remarks by the President in a Discussion on Jobs and the Economy," Charlotte, North Carolina, April 2, 2010.

"Protect communities and protect coastlines"; "protect America's natural resources -- tourism, the environment -- guided by scientific evidence"; "environmentally sound and not risky"; "low risk environmentally"; "technologically advanced -- oil rigs today don't cause spills." It sounds as if it was written by a BP publicist. Hopefully, it was not -- but the result is just the same.

Wrapping Up With Democracy Now:
How is the Environmental Impact of Offshore Drilling Like a Forest Trail?
To wrap it up, here is the "Democracy Now" interview of Kieran Suckling, executive director of the Center for Biological Diversity:

SECRETARY KEN SALAZAR: Minerals Management Service will not be issuing any permits for the construction of new offshore wells [after] May the 28th. . . . But today is not really the day to deal with those issues. . . .

[Democracy Now reporter] JUAN GONZALEZ: Secretary Salazar added that the existing offshore oil and natural gas drilling will continue, . . ..

[Democracy Now anchor] AMY GOODMAN: Salazar’s announcement comes on the heels of a Washington Post exposé revealing that the Minerals Management Service had approved BP’s drilling plan in the Gulf of Mexico without any environmental review. The article notes that the agency under Secretary Salazar had quote “categorically excluded” BP’s drilling as well as hundreds of other offshore drilling permits from environmental review. The agency was able to do this using a loophole in the National Environmental Policy Act created for minimally intrusive actions like building outhouses and hiking trails. Well, for more on this story, we’re joined now from Tucson, Arizona by Kieran Suckling, executive director of the Center for Biological Diversity. Welcome to DEMOCRACY NOW!, Kieran. Explain this loophole, how you found it, and what it means for the Gulf.

KIERAN SUCKLING: Well, when a federal government is going to approve a project, it has to go through an environmental review. But for projects that have very, very little impact like building an outhouse or a hiking trail, they can use something called a categorical exclusion and say there’s no impact here at all so we don’t need to spend energy or time doing a review. Well, we looked at the oil drilling permits being issued by the Minerals Management Service in the Gulf, and we were shocked to find out that they were approving hundreds of massive oil drilling permits using this categorical exclusion instead of doing a full environmental impact study. And then, we found out that BP’s drilling permit—the very one that exploded—was done under this loophole and so it was never reviewed by the federal government at all. It was just rubber-stamped.

JUAN GONZALEZ: Well, according to the Washington Post article, in one of its assessments of the agency “estimated that a large oil spill from a deep platform like the Deepwater Horizon would not exceed a total of 1,500 barrels and that a deepwater spill occurring off the Intercontinental shelf would not reach the coast.” Obviously, both of those—both of those assessments have proven dramatically off the mark. As many as 250-400 waivers a year for drilling in the Gulf?

KIERAN SUCKLING: Yeah, yeah, absolutely. It’s also important to note that when the government says it’s very unlikely this spill will occur, it’s unlikely the spill will reach shore, those aren’t even the government’s own assessments. They’re just repeating what BP, Exxon, and other oil companies put in their drilling applications. And since there’s no environmental impact study, the government never actually does an independent review. So everyone is just repeating the industry’s statements as they rubber-stamp the approvals.

AMY GOODMAN: Reporters questioned White House press secretary Robert Gibbs on Wednesday about why BP’s Gulf of Mexico drilling operation was exempted from the detailed environmental impact analysis last year. . . .

KIERAN SUCKLING: The White House and the Department of Interior are really sort of ducking their heads on this issue right now because it’s an enormous problem. Especially since just a few months ago the Government Accountability Office came out with the report on MMS’s operations in Alaska, where they also have offshore drilling, and specifically said the agency is not doing these environmental studies properly. They’re avoiding doing them at all. And then they went ahead knowing that the GAO had just done this study and continued to put them out. So, this is not something new. MMS knew they had a problem. In fact, when Interior Secretary Salazar first came into office, he announced ‘There’s a new Sheriff in town, I’m going to clean up this corrupt agency,’ and instead of doing that, he’s pushed them to put out more offshore oil drilling permits while not cleaning up what is clearly a broken process of doing any environmental review at all.

JUAN GONZALEZ: I want to play a clip of President Obama where he says that oil spills don’t come from rigs, but from refineries. He was speaking on April 2nd, just over two weeks before the explosion of the Deepwater Horizon rig.

PRESIDENT BARACK OBAMA: I want to point out, by the way, that oil rigs today generally don’t cause spills. They are technologically very advanced. Even during Katrina, the spills didn’t come from the oil rigs, they came from the refineries onshore. . . .

KIERAN SUCKLING: Yeah, I mean, I think what the President has said here is actually just very, very critical, because he is repeating, and I suspect without even knowing it, the big lie of offshore oil drilling. For decades, the oil companies and the Minerals Management Service have told us, ‘Oil drilling is safe, it’s fine, that’s not where oil spills come from.’ In fact, that’s the basis of not doing any environmental review is, you simply assert it will never be a problem, therefore, you don’t even have to study it. While it’s true that they don’t leak often, but when they do leak, it’s absolutely catastrophic. It’s very similar to nuclear power plants. They don’t often fail, but when they fail it’s catastrophic. And, therefore, you have to plan for catastrophe. You have to do very intensive environmental analysis, not simply say, ’It’s rare, so we can ignore it.’

AMY GOODMAN: Kieran Suckling, what do think has to happen right now?

KIERAN SUCKLING: Well, first off, I think that the President should announce a complete moratorium on all new offshore oil drilling. This three-week time-out is really too little, too late. And it’s very important to do that now because the president, under the urging of Secretary of Interior Ken Salazar, has planned to open up new offshore oil drilling in Alaska, in the eastern Gulf of Mexico, and on the Atlantic coast. And that just needs to end. It’s not safe anywhere, anytime.

Secondly, the president should immediately revoke existing oil permits and especially in Alaska. Shell Oil, this July, . . . is going to start doing offshore oil drilling in the Chukchi Sea of Alaska. And if you think it’s difficult to clean up oil in the relatively warm, calm Gulf of Mexico, imagine trying to do this with icebergs and sea ice, twenty hours of darkness, in the Arctic oceans. It just cannot be done. If this spill had happened in Alaska, its magnitude would have been ten times worse than has happened in the Gulf.

Then, thirdly, the President should start an initiation of an investigation of Ken Salazar and his role in allowing this to happen.

Salazar has been a major proponent of the offshore oil drilling industry. He passed legislation as a senator in 2006 to open up the Gulf of Mexico in the first place to offshore oil drilling. He gets campaign contributions by British Petroleum. And then he walks into this agency he is supposed to reform, and instead of reforming it, pushes it to do even more offshore oil drilling. So Ken Salazar is part of the problem here, not the solution. He should not be doing the investigation of MMS. He should be under investigation for helping to cause this crisis.

"Government Exempted BP From Environmental Review," Democracy Now, May 7, 2010 (video and transcript).

Most institutions only respond to internal problems when they become serious or dramatic enough to create significant adverse media coverage. The response may be helpful, or may be counterproductive -- even to the institution's self-interest.

But even after the public relations disaster there's no assurance meaningful reform will ensue. Consider our financial collapse. As I pointed out in a recent blog entry, the first thing to do if the problem is "too big to fail" is to make the institutions smaller. And yet, when the Senate tried it was the Senate that was "too" something; it failed. The Goldman Sachs alums won again.

A move to break up major Wall Street banks failed Thursday night by a vote of 61 to 33.

Three Republicans, Richard Shelby of Alabama, Tom Coburn of Oklahoma and John Ensign of Nevada, voted with 30 Democrats, including Senate Majority Leader Harry Reid of Nevada, in support of the provision. The author of the pending overall financial reform bill in the Senate, Banking Committee Chairman Christopher Dodd, voted against it.

The amendment . . . would have required megabanks to be broken down in size and capped so that their individual failure would not bring down the entire system. . . .

In practice, the amendment required the six biggest banks -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley -- to significantly scale down their size. It was touted as a way to end Too Big To Fail.

Though top Obama administration officials have not publicly opposed the amendment, its leading economists have opposed ending Too Big To Fail simply by breaking up the nation's financial behemoths. Austan Goolsbee and Larry Summers have both fought back against this idea, as has Treasury Secretary Timothy Geithner.

"Senate Votes For Wall Street; Megabanks To Remain Behemoths," Huffington Post, May 6, 2010.

It remains to be seen whether even America's worst environmental disaster, getting worse by the day, will be enough to change the culture of Washington anymore than our financial collapse was able to do.

But now at least we can see how to connect those slippery, oily dots; now we understand "the rest of the story."

Will we do anything about it -- you and me? That also remains to be seen.
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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P&L: Public Loss From Private Profit

May 3, 2010, 7:30a.m.

[If you're looking for the 12 prior blog entries about the ICCSD superintendent search see, "The Beat Goes On, But Music's Out of Tune," May 1, 2010, and 11 items linked from "Superintendent Murley's Calm Seas, Smooth Sailing," April 29, 2010.]

Capitalism Pours More Than Oil on Troubled Waters
(brought to you by FromDC2Iowa.blogspot.com*)
And see the more recent, related, "Big Oil + Big Corruption = Big Mess," May 10, 2010.

A series of national disasters, legislative and otherwise, but all with ties to Washington, have caused me to realize that there's more than oil creating America's troubled waters.

On March 31 of this year the President went to Andrews Air Force Base to announce:

[A]s we transition to cleaner energy sources, we’ve still got to make some tough decisions about opening new offshore areas for oil and gas development in ways that protect communities and protect coastlines. . . .

[T]he bottom line is this: Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.

So today we’re announcing the expansion of offshore oil and gas exploration, but in ways that balance the need to harness domestic energy resources and the need to protect America’s natural resources. Under the leadership of Secretary Salazar, we’ll employ new technologies that reduce the impact of oil exploration. We’ll protect areas that are vital to tourism, the environment, and our national security. And we’ll be guided not by political ideology, but by scientific evidence.

"Remarks by The President on Energy Security at Andrews Air Force Base," March 21, 2010.

So, oil industry executives, Republican "drill-baby-drill" cheerleaders, oil-funded Democrats -- oh, and you, Mr. President -- how's that scientific protection of tourism and the environment working out for you? Because it's not working worth a damn for the rest of us. We haven't seen much of BP's $5.6 billion in first quarter profits (an annual rate over $22 billion) trickling down to us so far, any more than we did from those of our dollars you gave to Wall Street. And it looks like this "we" to which you refer, you and BP, are on the verge of wiping out a significant portion of the economy of at least three southern states.

The disaster was predictable -- even if no one predicted it would come as soon as a month after the President's repetition of BP's reassuring words regarding its commitment to "reduce the impact of oil exploration" and protection of "areas that are vital to tourism [and] the environment . . .."

Why predictable? Consider the record:

The 2005 explosion at a refinery in Texas City, Tex., killed 15 workers and injured hundreds more. The Occupational Safety and Health Administration fined BP a record $87 million for neglecting to correct safety violations.

Only a year later, a leaky BP oil pipeline in Alaska forced the shutdown of one of the nation’s biggest oil fields. BP was fined $20 million in criminal penalties after prosecutors said the company had neglected corroding pipelines. . . .

Last year, when the federal Minerals Management Service proposed a rule that would have required companies to have their safety and environmental management programs audited once every three years, BP and other companies objected. The agency is also investigating charges by a whistle-blower that the company discarded important records from its Atlantis Gulf platform.

Clifford Krauss, "Oil Spill’s Blow to BP’s Image May Eclipse Costs," New York Times, April 30, 2010.

It's just another example of the consequences of the partnership and interlocking ties between corporate capitalism and Congress, known as a "corporatist" form of government (or that, in another time and place, were known as Italian fascism). Because, even if you happen to be a fan of fascism (which I am not), in its American incarnation the allocation of power and control is grossly out of balance in terms of the disproportionate influence of the capitalists on what ultimately emerges as "government policy." And while the Republicans are thought by some to be the party of big business, that is only because the Democrats were initially somewhat slow and clumsy in figuring out that "business is our friend." After all, the "self-regulation" of offshore drilling began under President Clinton and his pro-business Democratic Leadership Council -- including the regulation of those causes of disasters that are not "acts of God," or failures of technology, but rather the failures of top management.

"We are not supportive of the extensive, prescriptive regulations as proposed in this rule," wrote Richard Morrison, BP's vice president for Gulf of Mexico production. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs implemented since the adoption of [voluntary standards] have been and continue to be very successful." . . .

But when it proposed the rules, MMS said most accidents and spills can be traced to human error or organizational failures and said companies need to ensure safe and environmentally sound operating practices (Greenwire, June 16, 2009).

MMS regulations historically have focused on proper equipment operation, but the agency said at the time that equipment failure is rarely the primary cause of incidents.

An MMS review last year found 41 deaths and 302 injuries out of 1,443 oil-rig accidents from 2001 to 2007. The agency's analysis found a lack of communication between the operator and contractors, a lack of written procedures, a failure to enforce existing procedures and other problems.

"The MMS believes that if OCS [outer continental shelf] oil and gas operations are better planned and organized, then the likelihood of injury to workers and the risk of environmental pollution will be further reduced," the proposed rule said.

The voluntary approach was adopted in 1994 during the Clinton administration.

Mike Soraghan, "BP, Other Oil Companies Opposed Effort to Stiffen Environmental, Safety Rules for Offshore Drilling," Greenwire/New York Times, April 27, 2010.

. Regulators make strange bedfellows You do recall the Minerals Management Service don't you? "Government officials in charge of collecting billions of dollars worth of royalties from oil and gas companies accepted gifts, steered contracts to favored clients and engaged in drug use and illicit sex with employees of the energy firms, federal investigators reported yesterday." Derek Kravitz and Mary Pat Flaherty, "Report Says Oil Agency Ran Amok; Interior Dept. Inquiry Finds Sex, Corruption," Washington Post, September 11, 2008. Noelle Straub, "GAO Audit: MMS Withheld Offshore Drilling Data, Hindered Risk Analyses in Alaska," New York Times/Greenwire, April 7, 2010 -- roughly three weeks before the current disaster.

. Moreover, "The [Department of the Interior] inspector general said that these relationships have cost taxpayers $4.4 million in lapsed collection fees, but due to the sloppy administration at MMS, the real cost may go undiscovered. In a separate report, the Government Accountability Office (GAO) found that MMS is plagued by inefficiency in collecting royalties, and that there is no way to backtrack and figure out how much has actually been lost. Currently, oil companies submit their own data and MMS simply takes them at their word, rather than independently confirming that the numbers are correct — what the inspector general has referred to in a letter to Secretary Dirk Kempthorne as a “Band-Aid approach to holding together one of the federal government's largest revenue producing operations.” A separate GAO report found that the United States is not collecting fair market price for royalties on public resources — which may be seriously limiting the amount of money taken in by MMS, and hence, the taxpayers." "Broken Government," Center for Public Integrity.

Apparently no one knows precisely how much oil is now flowing into the Gulf of Mexico. Originally estimated at 1000 barrels a day, then 5000, some are now saying 25,000.

So how much total oil are we talking about? Two of BP's underwater fields in the Gulf are estimated to hold over 3 billion barrels of oil equivalent -- each. Clifford Krauss, "BP Finds Giant Oil Field Deep in Gulf of Mexico," New York Times, September 3, 2009.

How can we put this daily flow into an understandable perspective? Try this: Have you ever held a can of oil while it slowly drained into your car? Let's split the 5000-to-25,000 barrels a day into a conservative 10,000 barrels a day, OK? A barrel contains 42 gallons. A gallon contains four quarts of oil. So 10,000 barrels is 1,680,000 quarts of oil. There are 86,400 seconds in 24 hours of 60 minutes each. Let's say it takes 10 seconds to drain a quart of oil; that would mean one person, working continuously, with no breaks, 24 hours a day, could drain 8,640 quarts a day. At that rate, it would take 195 people on a large boat, filled with quarts of oil, working round the clock, each emptying a quart of oil into the Gulf every 10 seconds, to equal the 1,680,000 quarts of oil BP is dumping into the Gulf every day.

So the 11 lives lost on the offshore drilling rig explosion and fire very likely could have been avoided if government had not given in to the notion of "self-regulation." The impact on the coastal economy and environment and wild life could have been prevented. The economic cost of the clean up would have been saved. And hopefully someone will follow up by reviewing the accounting after this all is over to see if the President's reassurance that BP is going to pay for it all -- including the taxpayers' share of the massive government expenses on BP's behalf -- ever happens.

Coal

Meanwhile, an almost idential story played out in a West Virginia coal mine less than a month earlier.

[T]he explosion of the Upper Big Branch mine two weeks ago, a disaster that killed 29 miners, rattled West Virginia and, once again, raised questions about Massey’s safety practices . . . with federal investigators saying they suspect that a buildup of methane and coal dust led to the explosion . . ..

Four years ago, in another southern West Virginia coal mine owned by a Massey subsidiary, a preventable fire broke out two miles below the surface. A faulty conveyor belt that should have been better maintained ignited some coal spillage that should not have been allowed to accumulate, federal investigators found in a report compiled after the incident.

One of the miners hurriedly tried to connect a fire hose to a nearby water valve, but this was futile; the threads of the coupling and the outlet were not compatible. The miner then tried to open the valve — just to get water on the fire — but the line was dry. And things only got worse.

The miner belonged to a crew working in Massey’s Aracoma Alma mine. In a memorandum issued three months before this fire and widely disseminated in 2006, Mr. Blankenship, the company’s chief executive, ordered subordinates to run coal and ignore everything else.

Dan Barry, Ian Urbina and Clifford Krauss, "2 Mines Show How Safety Practices Vary Widely," New York Times, April 23, 2010.

Here is a company that had been written up literally dozens of times for safety violations, and did little if anything to remedy its miners' working conditions. The regulatory agency had the power to shut down such mines, but refused to do so.

A systemic problem

Chris Mathews has a feature he calls "Tell me something I don't know," on his MSNBC program "Hardball." My guess is that if you're a regular reader of this blog you already know what I'm about to tell you. But it bears repeating from time to time anyway.

We've recently seen the consequences -- in human life and the environment -- from the disproportionate allocation to corporations of the business-government partnership of power. These examples happened to involve corporations in the oil and coal industries. But the problems they illustrate are systemic.

Consider unsafe workplace deaths and injuries alone:

In recent weeks and months there have been a series of workplace tragedies that have heightened concerns—the coal mine disaster at the Massey Energy Upper Big Branch mine in West Virginia that killed 29 miners, an explosion a few days earlier at the Tesoro Refinery in Washington State that killed six workers, and the explosion at the Kleen Energy Plant in Connecticut in February that also claimed the lives of six workers.

In 2008, 5,214 workers were killed on the job—an average of 14 workers every day—and an estimated 50,000 died from occupational diseases. More than 4.6 million work-related injuries were reported . . ..

Federal OSHA can inspect workplaces on average once every 137 years; the state OSHA plans once every 63 years. The current level of federal and state OSHA inspectors provides one inspector for every 60,723 workers. OSHA penalties are too low to deter violations. The average penalty for a serious violation of the law in FY 2009 was $965 for federal OSHA . . ..

Death on the Job: The Toll of Neglect, April 2010.

But the adverse impact of our corporatist form of government on our citizens is not limited to their preventable injuries and death.

Healthcare It's the reason that "universal, single-payer health care," the care provided most of the world's people lucky enough to live in progressive, industrialized countries, and provided at significantly less cost than here, could not even make it onto any table in Washington. It's the reason that the "public option" was quickly shoved off the table, fell to the floor, was swept up and thrown in the trash. It's the reason the pharmaceutical companies got a secret closed door meeting at the White House -- and promises they could continue to gouge America's ill. It's the reason "health care" was quickly redefined as "health insurance" -- essentially a subsidy for the health insurance industry. And it's the reason why the lessons Atul Gawande taught us were ignored: how it is that some cities in America have higher quality medicine than others -- at half the cost. Atul Gawande, "Annals of Medicine: The Cost Conundrum; What a Texas town can teach us about health care," The New Yorker, June 1, 2009.

Financial regulation There are two obvious first steps, whatever else we may do, to bring common sense to Wall Street. One is what we did during the 1930s, and then repealed during the Clinton Administration: the Glass-Steagall Act (Banking Act of 1933). Glass-Steagall Act, Wikipedia ("The Banking Act of 1933 . . . introduced banking reforms, some of which were designed to control speculation. . . . Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm–Leach–Bliley Act."). The other is to break up the biggest, multi-trillion-dollar banks into banks with assets of $100 billion or less. This is not an antitrust issue; there may or may not be antitrust problems associated with the biggest banks (many economists say there are not). This is simply the smartest response to the "too big to fail, taxpayer bailout problem." You don't try to "regulate" to prevent the most obvious risks -- especially when that "regulation" will quickly come under the control of the regulated anyway -- you simply eliminate any possibility of the "too big" problem by making them smaller.

Sadly, like universal, single-payer health care, neither is even on the table, as Congress pretends to fashion regulations of derivatives and other creative casino games, regulations that will be creatively worked around by Wall Street's "masters of the universe" just as quickly as music-loving computer geeks create new ways to share copyrighted music illegally.

National Broadband Plan The FCC, commendably, wants more Americans to have access to broadband Internet connections at faster rates and lower prices. We need to be more competitive with other countries in the world. But once again, it looks like the cable television and telephone company influence in Congress may prevent the one thing that has enabled other countries to provide more of their citizens a faster service at significantly cheaper rates than American companies make available. It's called "open access" and "net neutrality" -- in other words, "competition" -- something heralded in a corporatist state only up to the point where it threatens to move in next door.

Nutrition Two generals who were former chairs of the Joint Chiefs of Staff are now telling us that Americans' obesity has reached not only epidemic proportions, it has become a threat to our national security. John M. Shalikashvili and Hugh Shelton, "The Latest National Security Threat: Obesity," Washington Post, April 30, 2010 ("Are we becoming a nation too fat to defend ourselves? It seems incredible, but these are the facts: As of 2005, at least 9 million young adults -- 27 percent of all Americans ages 17 to 24 -- were too overweight to serve in the military, according to the Army's analysis of national data. And since then, these high numbers have remained largely unchanged.").

Once again, any remedies must confront the money to be made, and the political ties it creates, from selling sugar-sweetened sodas in schools' vending machines, "sweet-grease-salty-grease" in fast food dispensaries, and pushing tobacco and alcohol addiction on our teenagers.

The Remedies

Why do we call the money corporations give to government officials a "bribe" when it's done in other countries, and a "campaign contribution" when it's done here?

The costs of running for office are a personal expense -- as are the upfront costs of establishing any other kind of business (which a seat in Congress certainly is). If you want to run you have to pay to do it. You have to pay for your food, clothing, housing and transportation while you're running. And you have to pay as many campaign advisers, workers, and media consultants as you think you can afford. Money is fungible. If you will pay for all of my food during the campaign there will be more of my personal income I can spend on the campaign. If you will pay some of my campaign costs I may be able to send my kid to a more expensive college. The super-wealthy do end up paying for a larger percentage of their personal campaign costs. It's certainly a personal expense for them. And it's also a personal expense for those candidates who beg for bribes from the corporate representatives who seek their votes.

How much money are we talking about? Try $5.3 billion -- for federal elections alone in 2008. "U.S. Election Will Cost $5.3 Billion, Center for Responsive Politics Predicts," Open Secrets Blog, October 22, 2008 ("The 2008 election for president and Congress is not only one of the most closely watched U.S. elections in years; it's also the most expensive in history. The nonpartisan Center for Responsive Politics estimates that more than $5.3 billion will go toward financing the federal contests upcoming on Nov. 4."). And that figure, of course, excludes the additional costs of lobbyists, said to run as much as a million dollars a day for Wall Street alone in its current efforts to block any meaningful reforms.

And what do the contributors get in return? Can you multiply $80-a-barrel oil times a 3-billion-barrel field?

Fourteen years ago I did the math -- not just for oil, but for a variety of industries. It turns out that bribing members of Congress pays even greater returns than Wall Street cons. The payback runs something between 1000-to-one and 2000-to-one. Give a million, you'll end up a billion dollars richer in return. Nicholas Johnson, "Campaigns: You Pay $4 or $4000," Des Moines Register, July 21, 1996, p. C2.

The payback can take a variety of forms: a tax break, price supports, defense contract, bank bailouts, tariff protection, subsidies, pet project earmarks -- or, as we've recently seen, permission to drill in formerly forbidden multi-billion-dollar offshore oil reserves, notwithstanding the economic and other risks to others and the relatively slight impact on our insatiable and wasteful demands for environmentally destructive energy.

As pointed out in the headline on that column, public financing of campaigns might cost every American $4. But with the 1000-to-one return the contributors are now getting that might be one of the best bargains we've ever been offered.

Because it is we who end up paying for the campaigns now. How? We pay as both taxpayers and as consumers. It's the excess taxes we pay to fund the weapons manufacturers' profits from weapons we do not need, and other transfers of taxpayers' money to corporations. And it's in the increased prices we pay those who have made the contributions, in the cost of everything from automobiles, to pharmaceuticals, to airline fares, to gasoline, to food -- in total, probably well over the $4000 I predicted.

What we've learned this past month is that we pay in other ways as well: those who provide our seafood who have lost their way of life as well as their source of income, those who enjoy the Gulf beaches who have lost their favorite vacation spot, those who've lost their homes, all of us who have lost the wetlands and wildlife they sustain -- and let us not forget the 11 BP employees and 29 Massey Coal employees whose loss was that of life itself.

Capitalism may have its virtues, but when it dictates public policy as well, the price it exacts from all of us is enormous.
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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