Republican leaders have proven the Democrats right: The GOP's teeth gnashing about "permanent bailouts" was cynical populist showmanship -- and Republicans can't pull off that act as well as President Obama.By proposing a financial reform bill that is mostly identical to the one proposed by Sen. Chris Dodd, D-Conn., Republicans have passed up an opportunity to simultaneously appeal to their base, by returning to their alleged principles of limited government, and appeal to much of the middle, by waging a populist battle against Wall Street's corporate-welfare queens who panhandle on Capitol Hill.
Friday, April 30, 2010
Wednesday, April 28, 2010
Lobbyists bundling campaign contributions, often from clients, to pass on to powerful politicians is exactly the sort of corruption Democrats came to power promising to fight. But the lobbyists doing the most bundling, and the politicians pocketing the cash, tend to be Democrats, a recent study shows.
A study by the Center for Public Integrity finds that the top four lobbyists in terms of bundling contributions for federal candidates and committees are powerful Democrats who contributed and raised cash exclusively to elect Democrats. These lobbyists' big business clients stand to benefit from Democratic policies on health care, the environment and trade.
Friday, April 23, 2010
Absent such regulations, an aluminum car frame is much more expensive than a steel car frame. With these regulations, aluminum, which is lighter, becomes more desirable.
So what's the problem? Alcoa is getting rich, but more people are driving lighter-weight, more efficient cars, right? Industry and the Earth both win, right? Hardly.
Making aluminum car frames requires much more energy than making steel car frames. One stage in the process -- dissolving the alumina to get pure aluminum -- inherently gives off carbon dioxide and the far more potent greenhouse gasses hexafluoroethane and tetrafluoromethane.
But Alcoa makes its aluminum in Australia, where Washington's CAFE and climate policies can't touch it. Down under, naturally, Alcoa's lobbying agenda isn't nearly so green. The Australian newspaper reported in 2008 that Alcoa "has warned that even a modest carbon cost on aluminum production could lead to plant closures in Australia and moves to higher-emitting plants in countries such as China."
Thursday, April 22, 2010
Today at Cooper Union, President Obama will say this about the House and Senate bills to regulate Wall Street:
Both bills represent significant improvement on the flawed rules we have in place today, despite the furious efforts of industry lobbyists to shape them to their special interests. I am sure that many of those lobbyists work for some of you. But I am here today because I want to urge you to join us, instead of fighting us in this effort.
This is vintage Obama, combining his “scourge-of-the-special-interests” rhetoric with his “can’t-we-all-get-along” talk. First let me point out a couple of problems with the Reformers-vs-Lobbyists frame.
Goldman is on Obama’s side
Not on the SEC-civil-suit issue, but on the issue of regulation. Obama today will lay out five principles that need to be in the bill for him to sign it: (1) “transparency” on derivatives, (2) the “Volcker rule,” (3) “consumer financial protection,” (4) pay reforms, and (5) some mechanism to prevent future bailouts.
Goldman endorsed (1), calling in its annual report for federally requiring derivate clearinghouses. Goldman signaled confidence it could handle (2) the Volcker Rule, because basically all of its trading could be classified as being related to client service. Politico has reported that the big banks are not longer fighting (3) a Consumer Financial Protection Agency, because “Big banks that have been vocal opponents of the agency have decided they have the legal resources to deal with a consumer agency.” Goldman CEO Lloyd Blankfein has been calling for (4) pay restrictions since last summer. And number (5), ending too-big-to-fail is a pretty loaded topic, but remember what Paul Volcker said last year: simply labeling certain banks as Tier 1 sends a signal to the market that they are too big to fail
Who are those dread Wall Street lobbyists?
Many of them are Obama’s friends, donors, and former employees. As I wrote in February:
The American Bankers Association retains the Democrat-heavy firm Glover Park Group, which just hired Grant Leslie away from Obama’s Agriculture Department.
At Goldman Sachs, the nation’s largest investment bank, four of the five in-house lobbyists were Democratic Capitol Hill staffers — the remaining one gave $1,000 to Hillary Clinton last election. One new addition to this shop last year was Michael Paese, recently the top staffer for Rep. Barney Frank’s Financial Services Committee. Paese gave Obama $500 in 2008….
Bank of America’s K Street platoon includes the Podesta Group, whose co-founder John Podesta was director of Obama’s transition team. Podesta Group lobbyists for Bank of America include Tony Podesta (who visited the White House six times in Obama’s first eight months) and Oscar Ramirez, an alumnus of the Obama administration.
Goldman Sachs retains plenty of Obama allies, including: former House Minority Leader Dick Gephardt; Harold Ford Sr. (father of the former representative and Obama supporter); and super-lobbyist Steve Elmendorf, Gephardt’s former chief of staff, who visited the White House at least six times last year.Read more at the Washington Examiner:
President Obama serially wages pretend wars against the special interests. It’s his thing.
Currently he’s pretending to battle Wall Street. Recently, he pretended to battle the health sector. Last year, he pretended to battle the banks on credit cards. But my favorite episode of Obama pretending to take on industry might be his regulation of tobacco.
In the Rose Garden, Obama declared, “Today, despite decades of lobbying and advertising by the tobacco industry, we’ve passed a law to help protect the next generation of Americans from growing up with a deadly habit. …”
At the same time, the largest tobacco company in America issued a press release declaring “Philip Morris supports federal regulation of tobacco.”
Philip Morris at the time was not merely the biggest tobacco company in America — it was half of the U.S. cigarette market. It also was a majority of the tobacco lobby, spending more on lobbying than every other tobacco company combined according to data from the Center for Responsive Politics. So we can debate the virtues of FDA regulation, but Obama can’t honestly claim he passed this bill “despite” the tobacco lobby.
Critics called the bill the Marlboro Monopoly Act, arguing that restrictions on production and advertising would further boost the market share of the industry leader, Marlboro. So far, the critics are right. From Altria’s quarterly earnings report:
Marlboro achieves record retail share of 42.7% in the first quarter of 2010
If they’re looking at these numbers, I’m sure Pfizer and Goldman are drooling over how Obama is sticking it to them, too.
When the health-care bill passed in March, I wrote that the health-care lobbying was just beginning and that: “You’ll also see the Democratic staffers who wrote the bill rewarded with plush lobbying gigs.”
It didn’t take long for me to be proven right. Akin Gump, whose clients include Aetna, Pfizer, General Electric, and the Pharmaceutical Researchers and Manufacturers of America, has hired a top staffer to House Speaker Nancy Pelosi — a staffer who played a key role in passing the health-care bill.
From Akin Gump’s press release:
Arshi Siddiqui, senior policy advisor and counsel to House Speaker Nancy Pelosi (D-CA), will join Akin Gump Strauss Hauer & Feld LLP as a partner in the policy practice in Washington….
Since joining Rep. Pelosi’s leadership staff in 2003, Ms. Siddiqui has provided counsel on numerous legislative initiatives, including the historic comprehensive health insurance reform legislation, the economic recovery package, and the financial recovery and stimulus bills.
Her work on health-care was so important, Pelosi thanked her by name on the House floor.
But check out Siddiqui’s portfolio as listed by Akin Gump — it’s a compendium of corporate welfare: the bailout, the stimulus, and a health-care bill that mandates private health insurance and subsidizes drug companies until they blush.
Not to question Siddiqui’s motives, but to point out the incentives that exist on Capitol Hill, imagine a staffer who pushed through a bill that removed regulations on insurers, repealed subsidies, and generally got government out of the hair of hospitals, device-makers, insurers, and drug companies. That result would probably be companies reducing their lobbying.
But write a bill that injects government into every decision — as a regulator and a funder — and you make lobbyists more important. And who better to help you navigate the maze of new handouts and rules that the people who wrote the rules?
This is why Obama cannot simultaneously increase government control over the economy and reduce the influence of K Street and special interests. Big Government is the mother’s milk of the special interests.
Wednesday, April 21, 2010
So, just as drug companies and insurers used Republicans to kill the public option before using Democrats to mandate insurance and subsidize drugs, big banks are using Republicans to kill a bank tax while using Democrats to erect barriers to entry, to institutionalize bailouts, and to restore confidence in Wall Street.
Saturday, April 17, 2010
President Obama has portrayed himself as the scourge of Wall Street, but that's not how Goldman Sachs's employees and executives saw in in 2008. In his successful White House bid, Obama had no better source of funds: He raised $996,595 from people identifying Goldman as their employer.
Let's put that number in perspective:
- It's the most any politician has raised from a single company since campaign finance reform.
- It was four times what John McCain raised from Goldman.
- It's more than the combined Goldman Sachs total of every Republican in 2008 running for President, House, and Senate.
Friday, April 16, 2010
"Given that much of the financial contagion was fueled by uncertainty about counterparties' balance sheets," Goldman Chief Executive Officer Lloyd Blankfein and President Gary Cohn wrote in a letter at the beginning of the annual report, "we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions."
Goldman's executives are calling for two regulations here. First, they want the federal government to restrict free-wheeling, heavily leveraged, high-stakes financial risk taking. Second, they want government to set more rules of the road for trading derivatives -- financial products that are often complex.
These are the very "fat cats" to whom Obama directed his trash talk in January: "If they want a fight, that's a fight I'm willing to have." Well, it looks like they don't really want a fight. It looks like they want more regulation. The question is: What's in it for Goldman?
Wednesday, April 14, 2010
Have I touched a nerve with liberal blogger Matt Yglesias at the Center for American Progress?
The fact is that Yglesias's agenda -- support for Barack Obama's health-care mandates, subsidies, and regulation plus support for the Waxman-Markey climate bill, to name two items -- is also the agenda of the lobbyists for many big business. On financial regulation, I am willing to wager that whatever bill Obama signs will have the explicit (though not necessarily public) approval of Goldman Sachs.
Yglesias has conventional wisdom on his side -- most writers assume that progressives are the foes of Big Business, and that Big Business is the foe of government regulation. That makes it odd -- though flattering -- that he's repeatedly come after the theme of my books and columns: that Big Business lobbies for and profits from Big Government at the expense of consumers, competitors, and taxpayers.
Back in February, for instance, Yglesias pounced on a Washington Post story headlined "Wall Street shifting political contributions to Republicans." The campaign finance numbers underlying this news story, however, proved exactly my point, as I drew out in a blog post
They show that the Securities and Investment Industry, Wall Street, gave 63% of its money to Democrats, improving on the Democrats' majorities from the 2006 and 2008 cycle when Wall Street gave Dems 52% and 57% of campaign cash. In fact, the numbers for the 2010 cycle so far are the most one-sided numbers we've seen from Wall Street as far back as records go.
As gravy ... the top three Wall Street recipients are all Democrats, and 8 of the top 10 are Democrats.
Today, Yglesias's evidence contra my thesis is this Charlie Gasparino story, which Yglesias sums up thus:
Mitch McConnell and John Cornyn want finance executives to know that concern for their interests burns deep in the hearts of Senate Republicans.
And Yglesias concludes:
Of course if the Banksters have read Tim Carney’s book they’ll know that McConnell and Cornyn are only pretending to be looking out for their interests, and really Barack Obama is their best friend.
For the record, in my book I never called Barack Obama Wall Street's "best friend." I did call him "Barack O'Bailout." I also pointed out:
- Obama was, perhaps alone outside of the Bush administration, in position to block the bailout, but instead he assured its passage.
- Obama renominated with glowing praise the bailout's chief champion, Fed Chairman Ben Bernanke. He also promoted the No. 1 behind-the-scenes bailout baron, Tim Geithner.
- In March, Obama created a new bailout program called the Public-Private Investment Partnership, which used the Fed and the FDIC to bail out both banks and investors.
- Obama raised about a million dollars from Goldman Sachs employees and executives in 2008, the most any politician has raised from a single company since McCain-Feingold. That was more than Goldman employees, execs, and PACs gave to every single Republican running for President, Senate, and House, combined.
- Obama added a fourth installment to the AIG bailout Geithner and Bernanke had authored.
- Obama's campaign advisor and fundraiser Warren Buffett invested $5 billion in Goldman just before the bailout, and had earned $4 billion on that in just nine months. (Remember when Obama said "We need a President who sees government not as a tool to enrich well-connected friends and high-priced lobbyists."?)
- Obama's West Wing includes Goldman alumni or former consultants Rahm Emanuel, Larry Summers, and Tom Donilon. Treasury Chief of Staff Mark Patterson is a former Goldman lobbyist.
- Obama raised $14.8 million from Wall Street -- more than any candidate in history.
So Yglesias can try to weigh his evidence -- which here is based on a small excerpt of the way Charlie Gasparino describes a meeting -- against my evidence, which demonstrates a pattern Obama consistently favors bailouts and gets campaign funding from Wall Street (I've got plenty more evidence that didn't make the book). But snarkily caricaturing my argument in an effort to snidely dismiss it suggests weakness of argument -- and maybe some insecurity, too.
President Obama said his nominee to replace John Paul Stevens on the Supreme Court would "be someone who, like Justice Stevens, knows that in a democracy, powerful interests must not be allowed to drown out the voices of ordinary citizens."
Tell that to the "ordinary citizens" of New London, Conn., whose homes were stolen by the government for use by real estate developers at the request of the largest drug company in America -- with the approval of Justice Stevens.
Monday, April 12, 2010
On Friday I wrote of a $2,300 donation to Obama for America in 2008 from registered lobbyist and Democratic power-broker Stuart Eizenstat -- in apparent violation of Obama's pledge not to take lobbyist money. My reporting was based on a filing by Obama's campaign with the Federal Election Commission. I've pasted an image of the record below, and you can see it in context here. In the filing, Eizenstat is listed as "retired" although he was actively registered as a lobbyist.
I had called Eizenstat, the White House, and the Democratic National Committee on Wednesday to see if there was an explanation for a maximum donation by a registered lobbyist when Obama said he wouldn't take lobbyist money. The White House directed me to the DNC, whose response was paraphrased in my column. I've included the full relevant portion of the email response below.
Eizenstat (whom I had called Wednesday morning) didn't call me back by deadline last week. Just now, however, he did.
His explanation: his wife had made that contribution on an American Express card. "If I was listed by whoever did the listing, it should have been Fran Eizenstat, not Stuart Eizenstat.” Mrs. Eizenstat gave the maximum to the general in September. The contribution in July was technically for the primary election.
Eizenstat told me it took him so long to call back because he was sorting through bank records to provide a full explanation.
On the rare occasion that a proscribed contribution makes it past our screening process because of a technical glitch, we return the contribution as soon as we are made aware of it, and we will be returning the contribution in this case as well."
Background: Eizenstadt made a contribution in 2007 that we flagged and returned. Due to due to a data entry error the 2008 contribution wasn't linked to the 2007 contribution and his status as a lobbyist.
Down at the Southern Republican Leadership Conference, a parade of potential 2012 GOP nominees, plus some other rising stars have addressed what Washington Post blogger Dave Weigel calls "the Republican wing of the tea party movement."
Rep. Ron Paul used the occasion to educate the crowd about the true nature of Obama's economic agenda. The Wall Street Journal reports:
“In the technical sense, in the economic definition, he is not a socialist,” the Texas Republican said to a smattering of applause at the Southern Republican Leadership Conference.
“He’s a corporatist,” Paul quickly added, meaning the president takes “care of corporations and corporations take over and run the country.”
Ron Paul is right. Obama has signed: a health-care bill that mandates we buy private insurance and has the endorsement of the drug industry; a tobacco regulation bill that earned the applause of the largest cigarette company in the country; a credit-card regulation bill that the banks like; a stimulus bill approved by the U.S. Chamber of Commerce and nearly every lobby in the country; a Cash-for-Clunkers bill that subsidized automakers, car-dealers, and more. Also, Obama has a huge corporate lobby on his side for cap-and-trade legislation. Plus, Obama backed the Wall Street bailout, has stuck close to its main authors Ben Bernanke and Tim Geithner, and even expanded the bailout.
I could go on, but the point is not simply that Ron Paul is right about Obama being a corporatist, the relevant point is that a few Republicans are starting to sound the populist note of calling out Obama's closeness with Big Business.
In December, Rep. Paul Ryan (R-Wisc.) wrote an op-ed headlined "Down with Big Business."
Last week, in the Republican response to President Obama's weekly address, Rep. Kevin McCarthy (R-Calif.) attacked Obama's financial regulation primarily because it would "guarantee permanent bailouts for Wall Street."
Ron Paul is also uniquely positioned to tap into the free-market populism notion. He's both the most free-market congressman, and the Chamber of Commerce's least-favorite Republican according to recent voting scorecards.
Friday, April 9, 2010
On July 23, 2008, according to papers filed with the Federal Election Commission, Democratic veteran Stuart Eizenstat gave the maximum legal contribution, $2,300, to Obama's campaign. The campaign reported Eizenstat's occupation as "Retired" and under "employer" was written "not employed."
But Eizenstat wasn't retired or unemployed on July 23, 2008. He was a federally registered lobbyist working for the K Street firm Covington & Burling.
In the week before the donation, Eizenstat had filed lobbying reports for seven different clients, and was listed as a lobbyist for three additional clients in Covington & Burling second-quarter filings. Eizenstat was also registered as a lobbyist on these accounts for the third quarter of 2008.
In a donation to Rep. Gary Ackerman, D-N.Y., one week before the gift to Obama, Eizenstat was listed in FEC filings as a partner at Covington & Burling. He was also listed as a Covington & Burling partner in his first contribution after the Obama gift, a $1,000 check to Rep. Charlie Rangel's, D-N.Y., campaign.
Wednesday, April 7, 2010
Under cap-and-trade, Apple would pay for the 400,000 tons of carbon dioxide emitted annually by its U.S. buildings and domestic operations, and also for the 500,000 tons of carbon dioxide emitted by shipping its products. But the 3.8 million tons of CO2 emitted by its manufacturing — 81 percent of the company’s total — would be exempt from a carbon tax because the emissions would be in China.
Many of the companies who take the Chamber’s side against cap-and-trade schemes are in a different position from Apple. These companies actually make stuff here, and so they would actually pay the energy tax that is cap and trade.
So Apple is loudly and self-righteously lobbying for “green” taxes that it intends to continue avoiding.
Tuesday, April 6, 2010
Below is the video of this event, and here is a podcast I recorded afterwards.
Friday, April 2, 2010
There are no good guys in this story. The bad guys are the Republicans who made a new entitlement for drugs, and Waxman who menaces companies for making Democratic legislation look bad.
The moral: Sticking government hands into the economy -- through new subsidies, taxes, and regulations -- creates bad situations where there are no right answers.