The Dysfunctional US Senate

This week it is the turn of George Packer, the noted journalist, columnist for Mother Jones, author and playwright, to write on the United States Senate. Taking to the pages of the New Yorker to pen this latest installment of what has become an all too regular occurrence among observers of our body politic, Packard asks the now oft-repeated question of just how broken is the Senate?

The answer is very. His twelve page masterful essay, full of insightful anecdotes and telling quotes, traces the descent of the Senate. Once a "cozy atmosphere that encouraged both deliberation and back-room deals," the Senate has become a dysfunctional, fractious chamber populated by “ideologues and charlatans” - to quote the oft-used characterization made by the Congressional scholar Norman Ornstein - who are governed by arcane, byzantine, and frankly absurd procedures and incapable of producing the necessary legislation or confirming the necessary appointments to keep the country moving forward. 

Packer's essay is a must read. I've opted to pull some of the anecdotes and quotes and offer some thoughts as well as add some supplementary evidence.

Michael Bennet, a freshman Democrat from Colorado, said, “Sit and watch us for seven days—just watch the floor. You know what you’ll see happening? Nothing. When I’m in the chair, I sit there thinking, I wonder what they’re doing in China right now?”

While academics and even Chinese officials are divided over whether there is such a thing as a "China model," the debate is more over whether the China model can be copied and transferred to other developing nations rather than over whether a Chinese path to development exists. Clearly, one does. The main advantage of the Chinese model is that being highly centralized decisions are made quickly and the resources committed.

To take one example, just look at the Chinese development of its rail and high speed rail transportation infrastructure. Beginning in 2005, China embarked on the second largest public works program in history, surpassed only by the Eisenhower-era Interstate Highway System in size. China plans to spend more than $1 trillion (or more than our $787 billion fiscal stimulus and as measure of comparison the Obama Administration has committed $8 billion in ARRA funds for high speed rail plus another $5 billion over 5 years) on expanding its railway network from 78,000 km today to 110,000 km in 2012 and 120,000 km in 2020 with 13,000 km being high speed rail. The Beijing-Hong Kong line would be the largest single element of the system, at more than 1,000 miles long. A comparable line in the US would run from Boston to Miami. And as our transportation infrastructure crumbles, Republican Senators would prefer to give tax cuts to the wealthy and than to reinvest in America. The monies are there but the will is lacking.

There's more...

Weekly Audit: Republicans Filibuster Our Financial Future

by Zach Carter, Media Consortium blogger

Last night, Senate Republicans proved beyond any doubt that when it comes to the economy, they stand with Wall Street and against everybody else. Joined by lone Democrat Sen. Ben Nelson (D-NE), Republicans successfully filibustered the procedural technicality of opening debate on Wall Street reform. It’s an unmistakable ploy to kill the bill and collect campaign cash from bigwig bankers. The coming weeks won’t be pretty.

Republicans are going to be battered by this filibuster. Financial reform is popular, and nobody on Capitol Hill wants to be seen as the agents of Wall Street in Washington come November. Republicans are hoping to rhetorically counter Obama’s proposals, negotiate a fatally weakened reform package, and then vote with Democrats for reform-in-name-only before the elections. But the U.S. financial system is broken and voters know it needs strong medicine.

In a speech last week before Cooper Union Hall in New York City, Obama laid out what’s at stake in the reform fight. Our biggest banks don’t fear failure because they know the government will bail them out in a crisis. As a result, they take massive risks that endanger the economy. Our current regulators ignored predatory lending in order to protect Wall Street profits. To top it off, the risky, multi-trillion-dollar market for derivatives—the financial weapons of mass destruction that brought down AIG—remains beyond the scope of regulatory authority altogether.

Without major changes, the U.S. economy is doomed to repeat the destruction of the past two years. Epic bailouts, consumer predation and heavy job losses will become the new national norm, not just the conditions of a single, terrible crisis. Last night’s Republican-plus-Nelson filibuster was an effort to preserve an unacceptable status quo.

Phony populism

As Matthew Rothschild emphasizes in a podcast for The Progressive, Wall Street Republicans have been spreading all kinds of crazy lies about Obama’s reform legislation. While the legislation that cleared the Senate Banking Committee in March isn’t perfect, it isn’t a massive bailout for Wall Street, either. But Senate Minority Leader Mitch McConnell (R-KY) has been making the rounds calling it just that, in a dishonest effort to kill the bill. This is phony populism. McConnell says he’s against bailouts, but his goal is to prevent reform from overturning the current system, which, as we saw in 2008, has bailouts baked in.

While Obama did a good job identifying what’s wrong on Wall Street, the solutions he proposed are either too weak to end abuses, or simply not included in the Wall Street reform bill in its current form. Obama’s initial proposal for a new Consumer Financial Protection Agency was great, but Sen. Chris Dodd (D-CT) watered down in the Senate Banking Committee to appease Republicans. The same thing happened to Obama’s proposal to fix the wild market for derivatives, the financial weapons of mass destruction that brought down AIG.

How to make reform a reality

As Sarah Ludwig of the Neighborhood Economic Development Advocacy Program (NEDAP) emphasizes in an interview with GRITtv’s Laura Flanders, most of the reforms currently under consideration are a “good first step.” That is to say they are useful and productive—but not enough to fundamentally change the way Wall Street does business.

Fortunately, there are several amendments that can fix these shortcomings, most notably the SAFE Banking Act, introduced by Sens. Sherrod Brown (D-OH) and Ted Kaufman (D-DE). As Peter Rothberg emphasizes for The Nation, the amendment would force our largest banks to split up into institutions that could fail without jeopardizing the broader economy. It would also place a hard cap on the total amount that banks could bet in the financial markets.

Those amendments, of course, can only be added to the bill if Republicans allow debate on financial reform to begin. Progressives should be fighting hard to make sure that the break-up-the-banks measure is included in the bill that the Senate eventually votes on. And as Rothberg notes, there will be plenty of opportunities to do so this week. Protests calling for Major Wall Street reform have been organized all over the country. On Tuesday, protesters will speak out against predatory banking behemoth Wells Fargo in San Francisco. On Wednesday, they will target too-big-to-fail titan Bank of America in Charlotte, N.C. On Thursday, reformers will march straight into the lion’s den on Wall Street itself to demand change. It’s called the Showdown in America, and you can find out more here.

It’s only just begun—but how did we get here in the first place?

But whatever happens with this bill, the fight to rein in Wall Street is just beginning. As Robert Kuttner emphasizes for AlterNet, President Franklin Delano Roosevelt had no shortage of verve for Wall Street reform, but it still took him seven years to enact all of the New Deal banking laws. And as Simon Johnson and James Kwak detail for The American Prospect, reining in Wall Street means overturning the ideology that has dominated the halls of power in Washington, D.C. for three decades.

Since the Reagan era, politicians from both political parties have sincerely believed that what is good for Wall Street is good for America. The subprime mortgage monstrosity and Great Crash of 2008 put cracks in the foundation of that ideology. But the process of demolishing it may very well take longer than the legislative cycle that will end with the November elections.

Even if we do get a strong bill—one that breaks up the biggest banks, bans them from placing risky bets in the derivatives and securities markets and establishes a new Consumer Financial Protection Agency—other important aspects of the financial sector will need to be addressed in other legislation. Hedge funds, whose pivotal role in the crisis is only now being identified, will need to be reined in. Rating agencies, who actively fueled the subprime bubble, and whose business models are founded on conflicts of interest, must be restructured. The future of Fannie Mae and Freddie Mac must be decided. Families across the country still need foreclosure relief.

We need a strong Wall Street reform bill. There is no excuse for any politician from either party to be standing with bigwig bankers against the rest of the country. And with two-thirds of the nation supporting reform, any political party that throws in its lot with Wall Street will pay a major price come November. No amount of Wall Street campaign cash can counter the voter outrage over bank bailouts and bonuses. There’s no way to know when Republicans will come to their senses, but whatever happens this week, there will still be much work to do this year and the next.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

 

Weekly Mulch: Cochabamba Summit to Combat Climate Change Innovatively

By Sarah Laskow, Media Consortium blogger

On Monday, climate activists, nonprofit leaders, and governmental officials will gather in Cochabamba, Bolivia, to look for new ideas to address climate change. The World People’s Conference on Climate Change and the Rights of Mother Earth, organized by leading social organizations like 350.0rg, “will advocate the right to “live well,” as opposed to the economic principle of uninterrupted growth,” as Inter Press Service explains.  In the absence of real leadership from the world’s governments, the conferees at Cochabamba are looking for solutions “committed to the rights of people and environment.”

The United States certainly isn’t stepping up. Sen. John Kerry (D-MA), along with Sen. Joe Lieberman (I-CT) and Sen. Lindsay Graham (R-SC), were supposed to release their climate legislation next week, just in time for Earth Day. But yesterday the word came down that the release was being pushed back by another week, to April 26.

No matter when it finally arrives, like other recent environmental initiatives, this round of climate legislation falls short. Even if Congress manages to pass a bill—and there’s no guarantee—it will likely leave plenty of room for the coal, oil, and gas industries to continue pouring carbon into the atmosphere. And a wimpy effort from Congress will hinder international work to limit carbon emissions: As a prime polluter, the United States needs to put forward a real plan for change.

Kerry, Graham, and Lieberman

Although the text of the bill is not public yet, it is likely that this attempt at Senate climate legislation will limit carbon emissions only among utilities and gradually phase in other sectors of the economy. On Democracy Now!, environmentalist Bill McKibben called the bill “an incredible accumulation of gifts to all the energy industries, in the hopes that they won’t provide too much opposition to what’s a very weak greenhouse gas pact.”

Climate reform began with a leaner idea, a cap-and-trade system that limited carbon emissions while encouraging innovation. The Nation’s editors document the transformation of climate reform from the Obama administration’s original cap-and-trade proposal to the behemoth tangle  it has become. Both the House and the Senate fattened their versions of climate legislation with treats for the energy industry. The Senate’s new idea to gradually expand emissions reduction through a bundle of energy bills only opens up more opportunities for influence.

“Some of these pieces of legislation may pass; others may fail; all are ripe for gaming by corporate lobbies,” the editors write. “Kerry-Lieberman-Graham would also skew subsidies in the wrong direction, throwing billions at “clean coal” technologies, nuclear power plants and offshore drilling, a questionable gambit favored by the Obama administration to garner support from Republicans and representatives from oil-, gas- and coal-producing states.”

Even with these goodies, the climate bill may not pass. The Washington Independent rounds up the D.C. players to watch as the next fight unfolds, including the Chamber of Commerce’s William Kovacs and the Environmental Protection Agency’s Lisa Jackson.

Green leftovers

In theory, the climate bill should not be America’s only ride to a greener future. But the other vehicles for green change choked during start-up. The EPA was going to regulate carbon emissions, but Congress has reared against that effort. The climate bill could snatch away that power from the executive branch.

If companies won’t limit their carbon emissions, individuals still have the option for action. But as Heather Rogers explains in The Nation, carbon offsets, one of the most popular mechanisms for minimizing carbon use “are a dubious enterprise.”

“To begin with, they don’t cut greenhouse gases immediately but only over the life of a project, and that can take years–some tree-planting efforts need a century to do the work. And a project is effective only if it’s successfully followed through; trees can die or get cut down, unforeseen ecological destruction might be triggered or the projects may simply go unbuilt.”

The pull of carbon offsets should diminish as energy use in buildings, cars, food, and flights gains in efficiency and uses less carbon. But if the green jobs sector is any indication, that revolution has been slow in coming. ColorLines reports that “there are no firm numbers on how many newly trained green workers are still jobless. But stories abound of programs that turn out workers with new, promising skills—in solar panel installation and weatherization, in places like Seattle and Chicago—and who nonetheless can’t find jobs.”

Cochabamba’s unique approach

These failures and setbacks don’t just affect Americans; they keep our leaders from negotiating with their international peers. The United Nations led a conference last winter in Copenhagen that promised to hash out carbon limits, yet produced no binding agreement. This coming winter, the UN will try again in Mexico, but if the United States shows up with the scant plan put forward by Kerry, Graham, and Lieberman, those negotiations have little promise.

In Cochabamba, leaders from inside and outside the government will attend a summit to discuss the future of climate change action. In The Progressive, Teo Ballve writes that,

“One of the bolder ideas is the creation of a global climate justice tribunal that could serve as an enforcement mechanism. And conference participants are already working on a “Universal Declaration of Mother Earth Rights” meant to parallel the U.N.’s landmark Universal Declaration of Human Rights of 1948.”

With U.S. government action paling, it might take outside ideas like these to revitalize the push towards a green future. By the end of next week, we’ll see if the Cochabamba group made any more progress than the bigwigs at Copenhagen.

This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Congress Must Get Tough On Wall Street

 

 

 

by Zach Carter, Media Consortium blogger

Congress returns from its April recess this week with financial reform at the top of its to-do list. With millions of Americans still bearing the brunt of the worst recession in 80 years, Congress needs to start protecting our economy from Wall Street excess, and repair the shredded social safety net that has allowed the Great Recession to exact a devastating human cost.

Big banks are an economic parasite

In an excellent multi-part interview with Paul Jay of The Real News, former bank regulator William Black explains how the financial industry has transformed itself into an economic parasite. Black explains that banks are supposed to serve as a sort of economic catalyst—financing productive businesses and fueling economic growth. This was largely how banks operated for several decades after the Great Depression, because regulations had ensured that banks had incentives to do useful things, and barred them from taking crazy risks.

The deregulatory movement of the past thirty years destroyed those incentives, allowing banks to book big profits by essentially devouring other parts of the economy. Instead of fueling productive growth, banks were actively assaulting the broader economy for profit. None of that subprime lending served any economic purpose. Neither do the absurd credit card fees banks charge, or the deceptive overdraft fees they continue to implement.

As Matt Taibbi explains in an interview with Amy Goodman and Juan Gonzales of Democracy Now!, banks didn’t just cannibalize consumers. They also went directly after local governments, bribing public officials to ink debt deals that worked wonderfully for the banks, and terribly for communities. In Jefferson County, Ala., J.P. Morgan Chase helped turn a $250 million sewer project into a $5 billion burden for taxpayers. The deal generated nothing of value for either citizens or the economy, but J.P. Morgan Chase was still able to line the pockets of its shareholders and executives. This kind of behavior was illegal, but the transactions involved were complex financial derivatives, which are not currently subject to regulation. To this day, nobody at J.P. Morgan Chase has been prosecuted for bribery or corruption.

Congress set to avoid tough regulations

There is a clear need for Congress to enact some firm restrictions against risky and predatory bank activities. But at the behest of Treasury Secretary Timothy Geithner, Congress is doing its best to avoid inserting any hard terms in legislative language, instead leaving the specifics to federal regulators to work out. As Tim Fernholz emphasizes for The American Prospect, this is an exercise in futility. Regulators already have the power to impose more stringent rules on nearly every arena of Wall Street business that matters (derivatives are a very noteworthy exception). If they wanted to fix things, they could do it without Congressional help. The trouble is, the financial sector has polluted most of the regulatory agencies, so that many regulators now act more like lobbyists for the banks they regulate, rather than law enforcers. Indeed, as I note for AlterNet, the top bank regulator in the U.S. spent over a decade lobbying for the nation’s largest banks before taking up his current job. If Congress doesn’t establish firm rules, regulators under future administrations would be free to simply undo any measures that the current agencies actually implement.

Megabanks equal mega risks

As Stacy Mitchell illustrates for Yes! Magazine, most of the problems in the financial sector are connected to the size of our banking behemoths. Big banks have enormous power—if they fail, the economy goes off a cliff. As a result, any responsible government wouldn’t allow any of our megabanks to actually fail. But knowing that the government will protect them from any true catastrophes, big banks take bigger risks—if the risk pays off, they get rich, if it backfires, taxpayers will suck it up. That puts the interests of big banks at odds with the public interest, and creates an economy where bankers don’t try to finance useful projects with a safe and steady return, but instead back crazy bets that just might pay off.

You can’t fix that problem with regulations or idle threats of taking down a big bank when it gets itself in trouble—the markets won’t believe it, and the banks will still take risks. The only solution, Mitchell notes, is to break up the banks into smaller institutions that can fail without wreaking havoc on the economy.

Economic inequality weakening the economy

All of this ties into rampant economic inequality in the United States. Since the 1970s, conservatives have waged a constant battle on the social safety net, shredding protections for ordinary people, while empowering corporate executives to take advantage of them. In an illuminating blog post for Mother Jones, Kevin Drum highlights the fact that average income has only rose from about $20 an hour in 1972 to $23 an hour today. This isn’t because workers were slacking off—productivity has increased at roughly five times that rate. In other words, nearly all of the economic gains since the Nixon era have accrued to the wealthy.

When people don’t have access to strong and improving income, they finance things with credit. But if wages never actually improve, that debt becomes a significant burden. When an entire society finds itself overly indebted, people stop buying things, and the economy tanks. The predation in the American financial sector makes this problem even worse.

But political theatrics are even trumping efforts to provide relief to those hit hardest by the recession. Sens. Jim Bunning (R-KY) and Tom Coburn (R-NE) have blocked the extension of unemployment benefits twice in the past month. As Kai Wright emphasizes for ColorLines, that recklessness puts up to 400,000 Americans at risk of losing their unemployment checks. That’s a human tragedy—hundreds of thousands of people will have no way to pay the bills. It’s also bad for business, since those people won’t have any money to buy things that businesses produce. It is, in short, short-sighted economic insanity.

The economy is supposed to work for everybody, not just the rich, not just bankers. For that to happen, politicians have to establish meaningful regulations to make sure finance works for the greater good– and safety nets to make sure that anyone who falls through the cracks doesn’t see her life prospects permanently diminished.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Weekly Mulch: New bills and old money

By Sarah Laskow, Media Consortium blogger

Climate legislation is returning to the Senate’s docket, and leaders on Capitol Hill are hoping that this version, a compromise bill spearheaded by Sens. John Kerry (D-MA), Lindsey Graham (R-SC) and Joe Lieberman (I-CT), can pass without getting caught in the morass of money and politics that has delayed action so far.

A long, long time ago…

Remember, there was a time when Congress was going to pass climate legislation before the international climate change negotiations in Copenhagen. President Barack Obama was going to show up with a bill in hand and lead the world towards a better climate future. After the House passed its climate bill in June 2009, the Senate began discussing climate change, and a first stab by Sen. Kerry and Sen. Barbara Boxer (D-CA) went nowhere. Now, Kerry has turned to less liberal colleagues to draft an alternative that would appeal to moderates and even Republicans.

Now the Massachusetts senator is promising that climate change isn’t dead. A new bill is coming—more information may be in the offing as early as today, as Kate Sheppard reports at Mother Jones.

Third time’s the charm

Sen. Kerry is trying a new tactic to pass climate legislation. He’s waiting to release his plan until he knows the bill has the 60 supporters it needs to circumvent a filibuster. The details have not been hammered out yet, and even the Senators who’ve been in talks with Kerry, Graham, and Lieberman don’t seem to have a clear sense of what will be in the version that will emerge.

In the House, Rep. Henry Waxman (D-CA), chair of the Energy and Commerce Committee, released an ambitious draft of the legislation, let lobbyists and members of Congress fight over it, and passed a much-changed edition months later. Sen. Kerry tried a similar plan on his side of Capitol Hill (that was the Kerry-Boxer bill), but it did not work.

With this piece of legislature, Sens. Kerry, Graham, and Lieberman are working out the compromises before they release the legislation. Both reporting and speculation about their bill say that it will abandon the cap-and-trade system passed in the House. Cap-and-trade restricts carbon emissions across the economy; a variation on that policy that the Kerry-Graham-Lieberman bill may favor will limit the system to a few sectors.

Will it work?

Kerry’s expected bill may be a much weaker plan than any proposed so far, yet it is still not certain that the Senate will support it. The lead authors of the bill have been meeting with conservative Democrats and moderate Republicans, as Sheppard reports, but those targets have not promised support yet. Coming out of a meeting, Sen. George Voinovich (R-OH) told reporters: “There were some interesting things that were discussed in there and like everything else in the United States Senate, the devil is in the details.”

From a distance, banner-day climate legislation still seems possible. Environmental groups like the Sierra Club, the National Wildlife Foundation, and the National Resources Defense Council believe that they will see a bill this year that caps carbon. These green groups would be able to live with the incentives handed to industry groups so far, according to Campus Progress’ Tristan Fowler.

“There are compromises [that can go] too far. Fortunately, I don’t think we’re getting near that territory at the moment,” Josh Dorner, a spokesman for the Sierra Club, told Fowler.

Sickly green

Before getting too excited about stamping a green seal of approval on Congress’ legislation, consider Johann Hari’s testimony in The Nation about the relationships between environmental groups and the industries that they oppose.

Hari has reported on climate change issues for years, and at first, he “imagined that American green groups were on these people’s side in the corridors of Capitol Hill, trying to stop the Weather of Mass Destruction. But it is now clear that many were on a different path—one that began in the 1980s, with a financial donation.”

Hari argues that as environmental groups began to reach out to polluters, handing them awards for green behavior and accepting support from their deep pockets, they learned to compromise too readily and accept political excuses for delaying action on climate change. While in other realms these compromises might fly, when the stakes are as high as they are on environmental issues, that behavior turns the stomach.

“You can’t stand at the edge of a rising sea and say, ‘Sorry, the swing states don’t want you to happen today. Come back in fifty years,’” Hari writes.

The green future

When Kerry, Lieberman and Graham do release the compromised bill, watch for a tsunami of money and influence that could pack the bill with prizes for specific industries—or derail it altogether. Just this week, the natural gas industry’s lobbyists told The Hill, a D.C.-based newspaper, that they were ready to fight with the coal industry over incentives in the Senate bill. At AlterNet, Harvey Wasserman writes that the nuclear industry spent $645 million in the past decade to get back into the energy game, according to a new report from American University’s Investigative Reporting Workshop. (Hint: that $645 million is working in their favor.)

In the Senate, the influence of oil companies will play an important role, according to David Roberts at Grist.

“While coal has a lot of power in the House, oil has enormous power in the Senate, particularly over the conservadems and Republicans needed to put the bill over the top,” Roberts explains.

No matter what legislation passes and what incentives it contains, environmentalists need to continue putting pressure on their representatives in Congress and on national environmental groups to push back against polluting industries and work to fix the world’s climate.

This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

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