Richard Shelby flashback: Do not block up-down votes for political gain.

UPDATE: Richard Shelby admitted that Cordray was “well-qualified” at hearings.”

Remember when Sen. Richard Shelby thought the politics should be eschewed in the nomination process. For instance, in 2005, he proclaimed:

Far too many of the President’s nominees were never afforded an up or down vote, because several Democrats chose to block the process for political gain. Inaction on these nominees is a disservice to the American people.”

Or when in February 2005, Shelby specifically promised his constituents in Tuscaloosa that he’d do “whatever it takes” to confirm Bush’s judicial nominees, including killing the filibuster.

Now that the White House isn’t occupied by a Republican, things have changed. President Obama has nominated former Ohio Attorney General to head the Consumer Financial Protection Bureau. But he cannot get a fair hearing:

But when he appears before the Senate panel, he’ll be stepping right back into that glare, knowing full well he’s got a tough road ahead of him. That’s because a filibuster-proof bloc of Republican senators headed off the White House in May, announcing their plans to block any nominee to head the bureau unless several changes were made to it.

There is no indication that the opposition of 44 GOP senators is wavering. In fact, they argue that the nomination of Cordray is pointless now, as any selection will be ignored without those changes in place.

“Opposition to or support of Mr. Cordray’s nomination will become relevant as soon as the president agrees to make the structural changes we’ve requested,” said Jonathan Graffeo, the spokesman for Sen. Richard Shelby (R-Ala.). “Until then, Sen. Shelby and his colleagues stand firmly behind the statement they expressed in their May letter: No accountability, no confirmation.”

In other words: no confirmation if we don’t get our way. Is that blocking nominations for political gain?

It appears that the Senate panel will actually vote on this nomination on October 6.

Democrats have the votes to move Cordray’s nomination out of the committee to the Senate floor, but that will likely be as far as it gets for the foreseeable future as political tensions remain high over the creation of the CFPB.

Republicans have promised to block Cordray’s confirmation by the full Senate unless the Obama administration agrees to change the structure of the agency. . .

Republicans have not focused on his record when objecting to his nomination, saying they will oppose any nominee.

As expressed by Congressman Barney Frank:

“Senate Republicans are not entitled to use the confirmation power as a bludgeon to get their way when they cannot do so through the normal legislative process,” Frank wrote in The Washington Post. “We’re going to see an extraordinarily qualified administration to an important consumer protection agency be trashed by the Senate Republican minority because their primary goal is to ensure that financial institutions are not troubled by what they may see as an excessive concern for consumer fairness.”

So why do Alabama families need an effective CFRB?

 

Monopoly Finance in Chart Form

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies . .

So wrote Thomas Jefferson to John Taylor.

And Woodrow Wilson wrote:

“If monopoly persists, monopoly will always sit at the helm of the government,” Woodrow Wilson once wrote. “If there are men in this country big enough to own the government of the United States, they are going to own it.”

Well, try this on and note the time frame:

 

Elizabeth Warren: Politics as if families mattered.

A local radio personality, @thedalejackson, tweeted a question: why are Democrats thrilled about Elizabeth Warren’s candidacy for US Senate. Are you kidding me? While I have not learned about all her positions, she sounds like a Democrat for me. In July she stated the preposterous:

“We’re not here to serve banks. We’re not here to serve Wall Street. We’re not here,” she emphasizes that last bit, “to serve Congress. We’re here to serve American families.“

In her announcement speech, I liked what I heard and I think the people of Alabama would agree.  She contended that working families have been

chipped at, hacked at, squeezed and hammered for a generation now, and I don’t think Washington gets it.

Washington is rigged for big corporations that hire armies of lobbyists . . .A big company like GE pays nothing in taxes and we’re asking college students to take on even more debt to get an education, we’re telling seniors they may have to learn to live on less. It isn’t right, and it’s the reason I’m running for the U.S. Senate.

We have a chance to put Washington on the side of families.

This isn’t just campaign rhetoric. Listen to these answers from an interview with Newsweek this summer before she was a candidate,

Q: Congress is trying to reform financial regulation, and it can get a little abstract. Where should people focus?

Warren: To restore some basic sanity to the financial system, we need two central changes: fix broken consumer-credit markets and end guarantees for the big players that threaten our entire economic system. If we get those two key parts right, we can still dial the rest of the regulation up and down as needed. But if we don’t get those two right, I think the game is over. I hate to sound alarmist, but that’s how I feel about this.

Q: Should the government step in and break up the biggest banks?

Warren: There are a lot of ways to regulate “too big to fail” financial institutions: break them up, regulate them more closely, tax them more aggressively, insure them, and so on. And I’m totally in favor of increased regulatory scrutiny of these banks. But those are all regulatory tools. Regulations, over time, fail. I want to see Congress focus more on a credible system for liquidating the banks that are considered too big to fail. The little guys aren’t immortal; they pay for their mistakes. The big guys can’t be immortal either. A free market cannot operate in a too-big-to-fail world.

Q: Why are people so angry about the government’s efforts to save the economy?

Warren: Many Americans want to know if the people in Washington are on their side or on the side of the powerful banks. There should never be a doubt about the point of any government action: it should always be to help families directly, or help markets in ways that help families. If that isn’t clear, I think the action is wrong, or the description of the action is wrong.

Q: The administration has been reluctant to pressure the banks because they say they need the financial system’s cooperation in their recovery policies.

Warren: The notion that we need to ask the permission of the big banks about which approach to use is just wrong. Who’s asking the American family which provisions are OK with them? I understand that we need to get the economy back on an even keel, and destroying large financial institutions isn’t going to do that, but neither is destroying the American middle class. We need to be asking, what are the best tools to repair the economy? Not, what are the tools most acceptable to the big banks?

Politics is to supposed serve families? Too-big-to-fail-banks should be broken up? Policy-makers should not craft policy to please Big Finance and Corporations? Guiding the marketplace to help families?

Can you imagine her on the same committee with Sen. Richard Shelby? Remember: Shelby blocked her nomination to the CFPB accusing her of leading a “regulatory shakedown” of the mortgage servicers.

Conservatives see something in her as well which confirms for me that her ideas and advocacy can receive a welcomed response even in conservative, red states like Alabama. Consider this from the American Conservative magazine yesterday:

I don’t know where she stands on social issues, but as a Harvard professor, I’m sure it’s well to the left of where I stand. But I’m tired of seeing my support for social conservatism dictate my vote for candidates who, in my view, work to undermine the stability of families by taking the sides of powerful financial interests. If Elizabeth Warren were a standard-issue Democrat, I wouldn’t give a fig for her candidacy. But she proved by her frustrated service in Washington that she can be an authentic populist. Why isn’t the Republican Party producing people like her: candidates who take clear and unambiguous stands against the bigness of banks, regulatory capture, and in favor of Main Street over Wall Street?

Even the ultra-partisan The Weekly Standard concluded:

But she understood the finance crisis better, she was the first to see it coming, and she did so by the simple means of listening to the American middle class. That is not nothing.

What do we, Alabama Democrats, fight for?

Warren remarked offhand today: “I’m willing to throw my body in front of the bus to stop bad ideas” Are Alabama Democrats? Justice Kennedy wanted a slogan for Alabama Democats.  Warren provided it in her announcement: Putting Montgomery on the side of families; a politics as if families mattered.

We can build with new speech like this.

 

GOP discovers new phrase: “Crony Capitalism”

It seems that some segments of the GOP have discovered a new phrase: “crony capitalism.” Michelle Bachmann and Sarah Palin include the phrase in all their speeches and interviews.

I reminded her, I wrote in “We will build with new speech” that a main plank for Alabama Democrats should be:

Rejecting Crony Corporatism. In a day when those who are positioned to “work the system” abuse the public coffers as a source of loot and use the arm of the government as a instrument of plunder, we need to return to Andrew Jackson’s slogan: “Opportunity for All, Special Privilege for None.”

My wife mockingly lovingly responded that they must be reading Keating’s Desk. I am back in my place now.

(BTW, Palin and Bachmann’s use of the word is merely rhetorical. Everything which surrounds the phrase only exemplifies crony corporatism. Forgetting that their position of public trust they seek requires they pursue the common good and public justice, the substance of their platforms caters and kow-tows to every shouted demand of their corporate masters. Environmental stewardship, dignity for workers in the workplace, restorative justice in courtrooms are all anathema for them.)

 

Out of all the presidential candidates, Sarah Palin finally says what-needed-to-be-said.

Perhaps drowned out by the pre-event drama, Sarah Palin delivered the best and most needed-to-be-said speech of the entire presidential campaign season at the Tea Party event in Iowa this weekend. As reported in the New York Times:

But something curious happened when Ms. Palin strode onto the stage last weekend at a Tea Party event in Indianola, Iowa. Along with her familiar and predictable swipes at President Barack Obama and the “far left,” she delivered a devastating indictment of the entire U.S. political establishment — left, right and center — and pointed toward a way of transcending the presently unbridgeable political divide. . .

There was plenty of the usual Palin schtick — words that make clear that she is not speaking to everyone but to a particular strain of American: “The working men and women of this country, you got up off your couch, you came down from the deer stand, you came out of the duck blind, you got off the John Deere, and we took to the streets, and we took to the town halls, and we ended up at the ballot box.”

But when her throat was cleared at last, Ms. Palin had something considerably more substantive to say.

She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).

In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth. She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital.

Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.

“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”

Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.

Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs. . .

“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”

Where did that come from? I could not have said it any better myself.

Wow.

 

ADO Greg Canfield promises AL will continue to pay extortion demands.

In what should be a repudiation of each Gubernatorial administration for twenty years, economists are publically calling into question the effectiveness of the primary industrial development strategy by Alabama Republicans and Democrats.  Their knee-jerk “jobs solution” is not getting much support from professional economists.

But many experts doubt whether tax cuts create jobs, particularly in a state that, by most measures, has the lowest tax burden in the nation.

“Taxes tend to be a relatively small component of the cost of doing business,” said David Brunori, a vice president at Tax Analysts, a Virginia-based nonprofit that provides tax news and analysis. “The real cost of doing business tends to be raw materials and labor. And that is really what drives business investment, assuming you have a market.” . . .

It’s not clear whether slashing taxes leads to paychecks. A 2010 paper prepared by the Federal Reserve Bank of San Francisco, which studied state tax credits for investments in equipment and research and development, found a one-percent cut to corporate taxes would only increase Alabama’s economic output by a half-percentage point. A one-percent increase in investment tax credits for equipment would boost it three percent.

While GOP Bentley/Hubbard/Marsh/Canfield continue to preach the gospel of more-and-more tax-incentive packages, Democrats are equally to blame. As I wrote months ago, “These type of policies only create a race to the bottom. Another state will always be able to play the system and out-bid us through greater tax breaks, more immunity, less restrictions, more grants, and more corporate welfare. At what point do our policy-makers look out for the common good? Can they not see that we are being played.  At some point, we must stop begging to be abused, bullied, and exploited.”

All partisans are guilty of playing this game:

Bentley isn’t the first governor to tout tax packages for development; Gov. Bob Riley touted similar legislation during his eight years in office and supported Bentley’s 2010 bill. Govs. Jim Folsom Jr., Fob James and Don Siegelman all sold tax-break laden packages for big companies as job creators.

And Alabama is not alone in offering credits: Business Week reported in July 2009 that states gave out $50 billion in tax incentives to companies during the prior year in an attempt to fight the recession.

“I think what is driving that is the politics and the need to do something, and the need to look like you’re doing something,” Brunori said.

For all that, both Brunori and Burtless weren’t certain how much lower Alabama taxes could go. Neither bill establishes a limit on the state revenue that can be reduced under the credits, and no one is certain how much state revenue would be lost from credit claims.

“I’m just kind of surprised Alabama has the tax resources to give up so many tax resources this way,” Burtless said. “That’s kind of an expensive program to do.”

“Doing something” sometimes is more damaging than not.  But our politicians cannot stop being extorted engaging in multi-state bidding wars .

Alabama Development Office director Greg Canfield argues that tax credits are a necessity in Alabama’s cutthroat competition with other states over business and jobs.

Tax credits are not the only tool employed by the state. Bentley last spring recommended a nearly $5 million, 20 percent increase in money for workforce development through the Industrial Training Institute. The Legislature ultimately approved a raise of $2.5 million.

“When Alabama is in competition for new investment in the state, we are in competition with other states,” he said. “Other states have a toolbox of taxes they use every day against us.”

Who’s throat is being cut? The working people and small businesses of Alabama. These multi-state corporations lodged state governments against each other so that small-businesses and working families get stuck with the entire tax obligation to fund all the services of the State.  When the publicly financed “honeymoon” is over, there’s nothing to keep the business from flirting with other potential suitors and starting the cycle all over again. Listen to some of these accounts from these bidding wars:

• PENNSYLVANIA: “The earliest example of this type of economic incentive was the Commonwealth of Pennsylvania’s offer of $86 million in incentives to build a Volkswagon factory in 1976. The factory was supposed to produce about 20,000 new jobs, but actually employed only 6,000 people before it shut down 10 years later.”
• KENTUCKY: “The race to grab federal funding for an advanced battery manufacturing plant may get more expensive for Kentucky taxpayers. State officials are trying to find additional incentives to bolster their chances against Michigan in a cut-throat competition for $2 billion in federal stimulus dollars to help fund proposed lithium-ion battery plants. Kentucky pledged on Monday to invest about $200 million in a $600 million advanced car battery plant proposed for Hardin County by a non-profit consortium of more than 50 companies.”
• GEORGIA: “State government incentives offered to lure technology company NCR to Georgia are worth at least $96 million, according to an Atlanta Journal-Constitution analysis. That is $36 million more than the state estimated when the deal was announced last week. The $96 million tally does not include another part of the incentive package, a state grant.”

Why must we play this game. Can we not call a cease-fire? After all, do these incentive packages even work?

The Corporation for Economic Development found:

most economists and policy analysts agree that incentives are not good development policy. In using them to attract businesses, cities and states: (1) waste scarce public dollars without creating net new jobs in the vast majority of cases; (2) subsidize the shareholders of these companies for the economic actions they would have taken anyway; (3) foster unfair competition by helping some firms and industries and not others; and (4) divert the attention of policymakers from other issues that could lead to additional job creation and a better business climate.

As Federal Reserve economist Arthur Rolnick noted:

Unfettered competition among private businesses has generally proven to be a very successful economic system … And experience has shown that Smith was right. Those countries that have relied on a market-oriented economy have outperformed (based on virtually all measures of success) those countries that have relied on a central planning strategy.

But what is true of individuals acting in their own interest is not necessarily true of state governments acting on behalf of their local citizens. Competition among governments based on their general tax-and-spend policies leads to a better outcome for the overall economy. However, when that competition takes the form of preferential financial treatment for specific companies, the overall economy is made worse off. Such competition results in a misallocation of resources and, in particular, too few public goods.

I am not suggesting the State sit idly by. I agree with the argument by Elaine Krewer:

while I don’t mean to oversimplify the issue, I can’t help but wonder why some people who would consider it wasteful pork to spend, say, $100 million on a public works program would not bat an eye at the same amount being given to a private company in the name of job creation.

For starters, instead of giving into the extortion, a better strategy to promote economic growth may be encouraging local businesses rather than recruiting large outside firms. Alabama should employing its purchasing power to build a market for Alabama businesses (see here, here), meeting our local needs, locally (see here, here),  rebuilding wealth-producing assets in the working people (see here, here ), empowering community anchor institutions, developing local energy production, and developing resilience in our communities and food supply.

 

$16 Trillion in Secret Bailouts revealed in initial audit of Fed

Fed. Chairman Bernanke, Pres. Bush, and Sec. Paulsen, architects of the bailouts

According to reports:

The first-ever audit of the US Federal Reserve has revealed 16 trillion dollars in secret bank bailouts and has raised more questions about the quasi-private agency’s opaque operations.

“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else,” US Senator Bernie Sanders, an Independent from Vermont, said in a statement.

The majority of loans were issues by the Federal Reserve Bank of New York (FRBNY).

“From late 2007 through mid-2010, Reserve Banks provided more than a trillion dollars … in emergency loans to the financial sector to address strains in credit markets and to avert failures of individual institutions believed to be a threat to the stability of the financial system,” the audit report states.

“The scale and nature of this assistance amounted to an unprecedented expansion of the Federal Reserve System’s traditional role as lender-of-last-resort to depository institutions,” according to the report.

$16 trillion? $16 trillion!?! And that is over and above the trillions in other TARP monies.

Crony Corporatism and picking winners? Check!

Some of the financial institutions secretly receiving loans were meanwhile claiming in their public reports to have ample cash reserves, Bloomberg noted.

The Federal Reserve has neither explained how they legally justified several of the emergency loans, nor how they decided to provide assistance to certain firms but not others.

“The main problem is the lack of Congressional oversight, and the way the Fed seemed to pick winners who would be protected at any cost,” Randall Wray, professor of economics at University of Missouri-Kansas City, told IPS.

“If such lending is not illegal, it should be. Our nation really did go through a liquidity crisis – a run on the short-term liabilities of financial institutions. There is only one way to stop a run: lend reserves without limit to all qualifying institutions. The Fed bumbled around before it finally sort of did that,” Wray said.

“But then it turned to phase two, which was to try to resolve problems of insolvency by increasing Uncle Sam’s stake in the banksters’ fiasco. That never should have been done. You close down fraudsters, period. The Fed and FDIC (Federal Deposit Insurance Commission) should have gone into the biggest banks immediately, replaced all top management, and should have started to resolve them,” Wray said.

Congressional oversight? Does anyone think Congress would have done anything differently if they had more oversight? They would have rubber-stamped these loans as well. Remember the logic of Congressmen like Mike Rogers from Alabama:

Now, over and above the other insane spending, corporate welfare, and tax-cuts, Mike Rogers voted for the most radical initiative of my lifetime: a trillion-dollar Wall Street bailout. A week before this, no one ever mentioned such, but Congress approved the bill a week after its proposal. He tacitly approved the buyout of Bear Stearns in March ($29 billion),  nationalization of an insurance conglomerate, AIG ($85 billion), and repossession of Freddie Mac/Fannie Mae ($200 billion).

The Congressman defends that “the Great Depression was the hard lesson of inaction.” On the contrary, following the excesses of the Roaring 20′s, then-president Hoover engaged in an aggressive “intervention” of artificial prices, credit expansion, propping up of weak firms, and increased governmental spending. Rogers’ and Hoover’s policies and rhetoric are eerily similar. Hoover said “we might have done nothing. . . .Instead we . . .put into action. . . the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic . . .” Hoover’s actions, not inaction, caused a necessary correction to spiral the economy into the Great Depression.  Congressman Rogers should reconsider the lessons learned from Herbert Hoover.

Conflicts of Interest and self-dealing? Check!

The GAO also found existing Federal Reserve policies do not prevent significant conflicts of interest. For example, “the FRBNY’s existing restrictions on its employees’ financial interests did not specifically prohibit investments in certain non-bank institutions that received emergency assistance,” the report stated.

The GAO report noted on Sep. 19, 2008, William Dudley, who is now the President of the FRBNY, was granted a waiver to let him keep investments in AIG and General Electric, while at the same time the Federal Reserve granted bailout funds to the same two companies.

And we question why we have a zombie economy today. As I wrote in 2008:

Congress deformed not just authentic prosperity in the near future but for the next fifty years. The market will be plagued with higher unemployment, rising costs of goods: long-term stagflation.In addition, Congress has directed us toward domination by a few huge universal banks and a small number of gigantic corporations, all of them “too big to fail,” under the careful tutelage of a governmental Leviathon dominated by these same cartels.

Does Congress not recognize this vote penalizes prudence, care and thrift and encourages further greed, seduction, waste, and ruin by the palaces of crony capitalism? Or does it agree with John Maynard Keynes, the father of this type economics, when he stated: “in the long run, we are all dead.”

While intentions to protect Main Street are good, Congress has failed to be the defender for the little people: small businesses, family farms, and local communities. Instead it has only transferred wealth from low- and middle-classes to pockets of those who know how to work the system: corporate fat-cats, Wall Street executives , and D.C. bureaucrats.

 

FYI: We just bailed out another Big Bank with 1/2 billion taxpayer dollars.

According to CNN Money:

Taxpayers may not realize it, but they just bailed out Bank of America again, this time to the tune of more than a half billion dollars.

The Charlotte, NC-based bank was one of the biggest recipients of bailout funds during the financial crisis. But Bank of America (BAC) continues to face deep problems related to its troubled mortgage portfolio and investors have battered the stock, which has plunged over 40% so far this year. That’s escalated concerns that the bank may need to raise more capital. Yves Smith at Naked Capitalism has even started a BofA death watch.

But apparently the federal government is determined to resurrect BofA: the Wall Street Journal reports the feds have just used Fannie Mae, which is controlled by the U.S. government, to infuse BofA with $500 million and ease one of the bank’s biggest headaches.

$500 million is somewhat misleading. The actual liability to taxpayers is much greater.

In fact, the deal is worth much more than $500 million to BofA, because getting rid of those servicing rights lifts a huge cost burden off BofA’s shoulders. And if securitized loans are involved, which they most likely are, the sale also limits the BofA’s potential liability to investors for its current servicing violations. Finally, the $500 million is surely more than the servicing rights are worth in an arms-length transaction. How do we know? Beyond the comment that the loans are expected to “deteriorate further,” the goal of the intervention can only be to fix Bank of America’s capital structure, which is easier for the government to do if it overpays for the rights.

In short, purchasing these servicing rights was another Troubled Asset Relief Program.

We still have not been paid back 31% of the bailouts from 2008; Corporate Cronyism at work.

 

At least we did not score an F.

Politicians brag about economic development programs; these plans invariably include “incentive” dollars that state and local governments provide to companies in the name of job creation, usually: property tax abatements, corporate income tax credits, sales tax exemptions and rebates, etc.

What kind of transparency exists for these tax give-aways? What kind of accountability is demanded in return?

According to a new comparative study on transparency of state level corporate welfare,

An increasing number of states are disclosing the names of companies that receive economic
development subsidies, but there is wide variation in the quality of such reporting. A few states
have created exemplary online disclosure systems, while many release recipient information only in obscure reports tucked away in remote corners of official websites. About a dozen states still keep taxpayers in the dark on the use of job subsidies, even though they cost taxpayers nationwide tens of billions of dollars each year in direct outlays and lost tax revenue.

Alabama is included in that dozen. How did Alabama score: a D-, 37th according to the report. That ranking actually makes us look better than the truth. While the average score for states with some disclosures was 59; our score was a miserable 10 out of 100. We barely missed the group of 12 states with absolutely no transparency or accountability.

Alabama has been involved in several high-profile development projects. For instance, Alabama offered a subsidy package that the ultimate cost of the subsidies could exceed more than $1 billion to Thyssen-Krupp.

At least 10 Wal-Mart locations have received subsidies worth about $49.8 million in Alabama.

Curently, the details of all the packages from across the state are hidden or are not readily accessible. The details of every package should be fully and completely available to the public. After all, how do we know if these projects are worth it.

This study not only addresses the disclosure of actual subsidies and tax breaks, but it also addresses performance assessment of the corporate promises. Accountability is as important as transparency.

Effective subsidy disclosure also requires the release of data on outcomes, especially job creation/retention as well as wage rates and benefit levels in those jobs. Information on the location of subsidized facilities is also valuable.

Why is this important? As suggested here,

At a bare minimum, we ought to ensure that every economic development deal our government makes includes a strong clawback provision . . .

If we are looking to increase the efficiency of the state’s economic development agencies, then we need to be collecting the performance management data that will allow us to make informed decisions and ensure that our economic development dollars [are] being spent as efficiently as possible,” the bill states. “Quite simply, you can’t manage what you can’t measure.”

. . . Uniform reporting requirements would require all applicants to economic development programs to meet certain data-reporting requirements, including existing as well as proposed job numbers, benefit levels and salaries.

Several states are models for greater transparency and openness. For instance, we could follow the example of other states which scored well.

• Illinois programs requires reports of both projected and actual jobs and wage rates. The reporting actually appears on the Illinois Corporate Accountability website, also stand out for dis-aggregating the wage data by occupational category and for requiring recipients to report annually on whether they are meeting job goals, and if not to explain why.
• Illinois, Kentucky, Missouri, Ohio, Pennsylvania and Wisconsin all have their reports available on the internet.

The report authors suggest the essential elements of a sound economic development disclosure program:

• For every company receiving subsidies, the public has the right to know how much it is receiving (both projected amounts and actual) from each program.
• The public should be told the exact location of the subsidized facility, including street address and ZIP code.
• The public needs to know how many jobs the recipient company proposed to create or retain and how many it actually did.
• There also needs to be information about the quality of those jobs. That means the projected wage rates of the positions and the actual pay levels achieved.
• In addition to broad average wage rates, which can be skewed by a few very highly paid employees, recipients should divide individual wage rates into ranges. Occupational breakdowns are also helpful.
• Agencies that oversee subsidy programs should report on whether recipients have met job creation and other targets. They should also report what the state agency has done (or not done) when recipients have failed to meet their projections.
• Agencies should make use of up-to-date web technology to create databases that allow users to search disclosure information from all of its programs in a single place.

 

TR’s advice for 1910 same for 2011: “We must drive the special interest out of politics.”

In one of President Theodore Roosevelt more famous speeches, he declared this:

Now, this means that our government, National and State, must be freed from the sinister influence or control of special interests. Exactly as the special interests of cotton and slavery threatened our political integrity before the Civil War, so now the great special business interests too often control and corrupt the men and methods of government for their own profit. We must drive the special interests out of politics. That is one of our tasks to-day. Every special interest is entitled to justice-full, fair, and complete-and, now, mind you, if there were any attempt by mob-violence to plunder and work harm to the special interest, whatever it may be, that I most dislike, and the wealthy man, whomsoever he may be, for whom I have the greatest contempt, I would fight for him, and you would if you were worth your salt. He should have justice. For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protection to property, and we must make that promise good. But it does not give the right of suffrage to any corporation.

As I argued here, I believe Alabama Democrats should once again adopt the principles expressed so well by that Republican President. The health of our democracy and the moral legitimacy of our republican institutions demands action.

The reasons were so clearly evidenced during the past few weeks. For instance,:

• Former lobbyist and current Alabama Attorney General Republican Luther Strange testified lobbied for Big Banks over remedies for the flawed foreclosure practices by the nation’s biggest banks became last fall’s biggest scandal. His testimony was contrary to the evidence or trends of the rest of the nation.
• The most powerful “Big Ag” players are writing exceptions to the rules for themselves contrary to family farms and food safety.
• Corporatist special interests worked their magic by severely limiting the government’s ability to protect the nation’s waters and supervise corporations’ pollution and discharges into our drinking water.
• Another release of documents showed how through corporate-funded American Legislative Exchange Council (ALEC), global corporations have “a VOICE and a VOTE” on specific changes to the laws that are proposed in your state.

And then came the release of a new report in the spike in corporate influence and power and representation in the halls of Congress.  While the Tea Party members believed their efforts would deliver them a Congress for them in November 2010, corporate special interest actually carried the day as evidenced by a new report by the non-partisan Center for Responsive Government,

In all, the number of lobbyists in Congress has increased more than two-fold between the 111th and 112th Congress, these lobbyists representing a variety of industrial sectors and special interest areas. There’s also a partisan nature to the increase in lobbyists, with an influx of lobbyists working for freshman Republican representatives. Furthermore, several major companies’ former hired guns now work for the very congressional committees they used to lobby.

So while the Tea Party fought for their candidates, it appears the corporate special interest are in the inner sanctum of these new members. The corporate masters are delicately teaching these young padawans the ways of the masters.

But in general, former lobbyists are actually over-represented on the staffs of Republicans in positions as
chiefs of staff and legislative directors, as 55 percent of current members of Congress are Republicans
and 63 percent of former lobbyists working in Congress work for Republicans. . .

However, of the 38 freshman congressional members in the 112th Congress who hired lobbyists, only
two — Blumenthal and Sen. Joe Manchin (D-W.Va.) — are Democrats.

Why the 130% increase in lobbyist in critical positions of influence? Power.

According to the report, certain industries’ influence has spiked.

[F]ormer lobbyists are not evenly distributed across all sectors. For example, few former labor lobbyists occupy these high-powered congressional staffer positions, while a large number come from the health, finance, energy and telecommunications sectors. The increase in the number of former lobbyists who represented at least one client in the above sectors is marked, with the percent increase between the two Congresses approaching 300 percent for one sector. Several sectors saw increases of more than 200 percent — notably, transportation, agribusiness, energy, finance and health. The energy sector, in particular, displays a considerable influx in the number of its former lobbyists now working for Congress. The average increase in the number of lobbyists representing the above sectors was 194 percent2 , but the number of lobbyists-turned-staffers who had represented at least one client in the energy sector has skyrocketed. Included in those 41 companies are major international corporations, like BP, but also relatively smaller companies, such as Southern Co.

The lobbyist came directly from the lobbying world, K Street.

As we have shown, Republican freshmen representatives hired a disproportionately large number of former lobbyists. These lobbyists, on average, came straight from “K Street,” the boulevard in Washington, D.C., that is synonymous with the lobbying industry. They stopped lobbying in 2009, and 26 of them filed their last lobbying report in 2010, the year immediately preceding the job they took in the 112th Congress. In short, congressional members are not just hiring run-of-the mill lobbyists. Rather, they are hiring trained, often highly-specialized, influence brokers who may have more experience than the members for whom they work.

These lobbyists have taken temporary “pay-cuts,” too, to “help” these new Tea Party Congressmen.

Legistorm.com, a transparency organization that reports staff positions and salaries for all people employed by Congress, provides information suggesting that some of these reverse lobbyists may have taken major pay cuts to enter the public sector. One excellent example of this phenomenon is Andres, a former lobbyist who earned $419,000 in 2010. Now, according to Legistorm, Andres earned $42,000 between January and March 31, which puts him on track to earn less than half of his previous salary.

I have been taught that the position of influence is actually more important than the position of power. For instance, all through the Bible, God commonly placed his leaders in places of influence instead of positions of power: Daniel, Joseph, Ester, etc. Corporate special interests have now placed their operatives in the back-rooms, in the positions on influence.As the report concludes,

But it may also be the case that these former lobbyists are now in the position to exercise considerable sway over everything from policy outcomes to government contract decisions and anti-trust decisions. Particularly where the issues are complicated and do not drive significant constituent interest, former clients of ex-lobbyists now working in Congress could be well placed to reap the rewards of enhanced access and deeper connections into government’s legislative branch.

As in TR’s day, once again, “now the great special business interests too often control and corrupt the men and methods of government for their own profit. We must drive the special interests out of politics.”