QOTD: Blame the Corporate Lobby
Steven Pearlstein goes off on CEO’s and their corporate lobbyists — and why they shoulder some blame for our current fiscal woes:
“When it started out all you really wanted was to push back against a few meddlesome regulators or shave a point or two off your tax rate, but you were concerned it would look like special-interest rent-seeking. So when the Washington lobbyists came up with the clever idea of launching a campaign against over-regulation and over-taxation, you threw in some money, backed some candidates and financed a few lawsuits.
The more successful it was, however, the more you put in — hundreds of millions of the shareholders’ dollars, laundered through once-respected organizations such as the Chamber of Commerce and the National Association of Manufacturers, phoney front organizations with innocent-sounding names such as Americans for a Sound Economy, and a burgeoning network of Republican PACs and financing vehicles. And thanks to your clever lawyers and a Supreme Court majority that is intent on removing all checks to corporate power, it’s perfectly legal.
Somewhere along the way, however, this effort took on a life of its own. What started as a reasonable attempt at political rebalancing turned into a jihad against all regulation, all taxes and all government, waged by right-wing zealots who want to privatize the public schools that educate your workers, cut back on the basic research on which your products are based, shut down the regulatory agencies that protect you from unscrupulous competitors and privatize the public infrastructure that transports your supplies and your finished goods. For them, this isn’t just a tactic to brush back government. It’s a holy war to destroy it — and one that is now out of your control.”
-Steven Pearlstein: Blame for financial mess starts with the corporate lobby
I cannot disagree with that . . .
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August 14th, 2011 at 8:39 pm
Why stop there? It goes beyond just that… they move production facilities overseas, the fiddle to books to show profits in low-tax countries… they simply feel they are able to shift about in the world as they please, yet feel they should be protected financially, socially and militarily by the governments they refuse to support.
August 14th, 2011 at 8:42 pm
Hey Barry, When do you rest?
August 14th, 2011 at 8:57 pm
The problem is not the Lobbyists but rather that the congressmen and senators will drop trow and assume the position for what is really a pitance. Say your a fortune 50 company and you are faced with either making a say a 750 million investment in plant and capital or loss in revenue inorder to comply with a federal regulation or you could spend say 7 million on a lobbyist who could could strategically manage your campaign donations and do some one on one meetings with key legislators facilitated by said donations. If the parties would at least “charge” what the break even price would be they would at least get there monies worth for selling out their constituents as opposed to leaving a ton of cash on the table. For the most part, I have not met a single person on the hill who would roll over for a dollar irregardless of the issue and their own political stance.
August 14th, 2011 at 9:00 pm
Read it and emailed it to Friends and family, some will get it and some, I think, would rather stay in denial as to what is happening here. I think even .then they will only start paying attention to this when there is rioting and looting in our streets. But then again, they will just blame those minority people. Moving beyond disgust to just plain cynical.
August 14th, 2011 at 9:13 pm
‘… a jihad against all regulation, all taxes and all government, waged by right-wing zealots who want to privatize the public schools that educate your workers, cut back on the basic research on which your products are based, shut down the regulatory agencies that protect you from unscrupulous competitors and privatize the public infrastructure that transports your supplies and your finished goods.’
I’m unaware of a single one of these alleged goals being achieved. By contrast, after one signed-and-delivered legislative change pushed by left-wing zealots — Obamacare — health insurance costs have continued rising at a brisk pace. And an appeals court just said that the law trashes the constitution.
Pearlstein sets up a ridiculous straw-man caricature, and then punches the living daylights of him. Pretty impressive for an ink-stained wretch whose daily exercise consists of hefting styrofoam coffee cups!
Last I checked, the WaPo’s profit was almost chopped in half in its last quarterly report. For good reason — it’s standard grey-water MSM bilge.
August 14th, 2011 at 9:15 pm
To borrow one of BRs recommendations, perhaps public financing of elections would stem the tide of corruption but I also would like to see public education become private education with a few of my refinements of course
August 14th, 2011 at 9:39 pm
“And thanks to your clever lawyers and a Supreme Court majority that is intent on removing all checks to corporate power, it’s perfectly legal.”
It might be legal, in the sense that it was done under the color of law, but it is anything but perfectly legal.
In addition to the more blatantly unconstitutional laws and powers we have allowed to become precedent (currency, the right to trial by a jury of peers where the value in controversy shall exceed twenty dollars, or the duty of Congress to declare war, for example), the idea that our constitution protects corporations, or that the drafters ever contemplated the creation of a legal super person that can neither die, nor be a citizen, nor vote, nor swear an oath, nor be deposed, nor indicted, tried, or convicted of a crime, is ridiculous.
Some might think it heresy, but we need to do away with corporations completely. Except in situations where the risks associated with a particular business activity is great but the potential reward to society is compelling enough to limit the liability of the enterprise (the hurried development of a vaccine, for example), there is no valid reason or social benefit to offering such legal insulation to a mob of thieves and despoilers. The corporate shield has become both a license to cheat the system and a get-out-of-jail-free card. It no longer limits liability, it encourages criminality.
August 14th, 2011 at 9:44 pm
Bernanke Pledges to Screw Your Grandmother for at Least Two More Years.
http://www.theburningplatform.com/?p=19975
August 14th, 2011 at 9:53 pm
And they have the Tea Partiers bought into an equation in which they are the ultimate losers. Karmic, except they’re dragging the rest of us humble peasants along with them.
August 14th, 2011 at 10:03 pm
It all makes perfect sense since Corporations are people .. my friends.
August 14th, 2011 at 10:08 pm
Agree with your article. But I also see economic theory supporting it. When tax rates turn regressive/flat (i.e. when top-quartile effective tax rates are less than 25% higher than rates on the lowest quartile of income earners), then the lower marginal propensity to consume by top earners slams the brakes on the economy. I’m guessing that the top 10% of earners have a very low burn rate (less than 50% 0f income).
There are some idiots out there who also argue that money goes into needed investment. Why that is a stupid argument is that, most of the time, economies run at rates of industrial capacity and employment
that are far below maximum levels.
It’s simple to see why all ignore these parameters – there’s never any money/glory in having economic policy whose goal is to raise standards of living for all. Most of it is driven by special interest. In the end, I see changes in tax rates as a much greater influence on economics than the arbitrary and mostly incorrect adjustments to interest rates by central bankers. Unfortunately, this all means that corruption is high.
August 14th, 2011 at 10:26 pm
machinehead:
Maybe you’re mistaking “Obamacare” for some sort of left wing social handout, when it’s anything but (you might also view Obama himself, as being left wing or liberal, but his record says different).
Obamacare was a direct gift to the insurance industry — nothing less, nothing more. It is as right-wing/corporatist as you can get. The recent decision was spot on: The government has no right to force anyone to purchase anything from a private entity or class of entities. Period.
As for the jihad against regulation, hell, who cares about regulation when we don’t even have enforcement anymore?
The rest of it that you say hasn’t been achieved is on the fast track, and the Republicans have shown that they will indeed destroy the government if they don’t get their way. The privatization of government functions — including schools, military operations, prisons, pensions, space exploration, roadways, the Postal Service, and key energy, utility, infrastructure, and communications resources is a key plank of the Republican platform (that the private sector does anything better, faster, or cheaper than the government is not supported by any evidence).
August 14th, 2011 at 10:34 pm
@Petey Wheatstraw Says:
“that the private sector does anything better, faster, or cheaper than the government is not supported by any evidence” Totally disagree. There is plenty of evidence for instance: Wasn’t the banking industry bailout the best, fastest (1 year?) and cheapest (how much did they paid for congress?) heist in history?
August 14th, 2011 at 10:51 pm
I can’t help but be entertained by a notion . . . the idea of a city which is under siege by those whom have already captured it.
Interesting nation . . one in which so many groups and corporations seem to seek the esteem of being the highest placed squatter at the Treasury.
August 14th, 2011 at 11:14 pm
Yea! Petey Wheatstraw!!!!!!
You are spot on. Myself, I think Karl Marx was right. Capitalism will collapse by itself.
August 14th, 2011 at 11:44 pm
Petey,
re..”…Except in situations where the risks associated with a particular business activity is great but the potential reward to society is compelling enough to limit the liability of the enterprise (the hurried development of a vaccine, for example)…”
remember..”… there is no valid reason or social benefit to offering such legal insulation to a mob of thieves and despoilers. The corporate shield has become both a license to cheat the system and a get-out-of-jail-free card. It no longer limits liability, it encourages criminality…”
on ‘Vaccines’, you may care to read some of http://www.whale.to/vaccines.html
http://www.whale.to/vaccines/flu.html
http://www.whale.to/vaccines/vaccines.html
http://www.whale.to/m/exp8.html
surprisingly, or sadly (POV dependent, of course) too much of that information ‘checks out’ ..
August 14th, 2011 at 11:58 pm
machinehead,
Pay attention. The vast majority of the gift to health insurers and big pharma otherwise known as “Obama Care” doesn’t even kick in until 2013 and more will be phased in in later years.
Hard to keep all of the facts straight, I know, but before you bash something you obviously know little about please educate yourself.
August 15th, 2011 at 12:25 am
Now this seems much more on track than blaming the Tea Partiers.
August 15th, 2011 at 3:35 am
Blaming corporations for the problem is like blaming a rattlesnake when it bites you. The type of people that succeed in the corporate culture are sociopaths and they are doing what seems rational; gaming the system as they found it and corupting the regulatory and political systems designed to inhibit their goals.
Politics doesn’t attract moralistic types, the majority are lawyers.
August 15th, 2011 at 6:14 am
(just to add my two cents to all above commentary):
Don’t expect anything to get any better for the common citizen, going forward, as politics has become totally ineffective (i’d say “dead”) as an agent of progressive (and now even liberal) change. Even the so-called watchdog agencies have become toothless shells of their mandated positions, often headed (by appointment) by the very corporate people from who they’re intended to protect us.
August 15th, 2011 at 6:18 am
(sorry, forgot the link to support my statement):
http://www.propublica.org/article/this-weeks-top-muckreads-troubled-doctors-the-war-on-meth-and-more-untested
August 15th, 2011 at 8:54 am
Top 20 Political “Heavy Hitters”
Top 20 Political Donors, 1989-2010
Rank Organization Total Donations, 1989-2010 Dem % Rep %
1 ActBlue $52,572,081 99% 0%
2 American Federation of State, County & Municipal Employees $45,238,103 94% 1%
3 AT&T Inc. $41,314,444 45% 54%
4 National Association of Realtors $39,717,410 47% 49%
5 National Education Association $36,312,895 81% 5%
6 Service Employees International Union $36,043,789 77% 2%
7 American Association for Justice $33,983,671 89% 8%
8 International Brotherhood of Electrical Workers $33,476,655 97% 2%
9 Laborers Union $31,335,267 89% 7%
10 American Federation of Teachers $31,023,603 90% 0%
11 Teamsters Union $30,632,309 89% 6%
12 Carpenters & Joiners Union $30,523,437 86% 9%
13 Communications Workers of America $29,468,934 95% 0%
14 American Medical Association $27,431,405 39% 59%
15 United Auto Workers $27,108,182 98% 0%
16 United Food & Commercial Workers Union $26,788,209 93% 0%
17 National Auto Dealers Association $26,664,992 32% 67%
18 Machinists & Aerospace Workers Union $26,407,374 98% 1%
19 United Parcel Service $24,505,222 37% 62%
20 American Bankers Association $24,190,464 39% 60%
Average 76% 20%
.
August 15th, 2011 at 9:00 am
There are many, many (what I call) acronym organizations out there. They are on all sides–from businesses, to unions, to environmental, to schools, to industries, to churches–all designed to influence. And to conceal the participants and dress up their intent.
August 15th, 2011 at 9:12 am
StatArb, if you calculate it down to the top 140 donors (source: opensecrets.org), the breakdown of Dem/Repub is closer to 60/40.
August 15th, 2011 at 9:15 am
With that said… it’s pretty dang easy to cherry-pick data to make whatever point you were trying to make (I’m assuming you’re trying to make a point here, I may be wrong). It would be interesting to see how it breaks down just for more recent times.
August 15th, 2011 at 10:43 am
Petey;
You are absolutely right that the facts do not support the myth of private sector doing things better, faster or cheaper than government. That is just a myth that is used to sell a moronic public on the privatization idea (and when you repeat a lie enough time idiots start parroting it as self evident truth). The real purpose is to move activities out of the protected governmental environment and into the free market where predatory capitalists can feast on regular people. We don’t talk much about the old am-Bush plan to privatize social security, but we all know in what pockets the baby-boomers retirement would have ended up if that one had succeeded (some say it was actually a GOP plan for saving the banksters from the inevitable crash of the housing market).
August 15th, 2011 at 11:35 am
You have to love articles from either side, left or right, where the authors premise is that any law, regulation or tax policy that the other side supports is not only wrong but is harmful to the economy and the country. The article would have been less of a partisan hack job had the author given at least one example of a CEO who we could “blame for the financial mess”. It could have moved to the top of the creditability charts (with a bullet) had the article also included all the money the side he supports has given to get their policies enacted. I’m sure Goldman’s $1 million dollar contribution to Obama’s Presidential campaign, or the banking industry’s donations to members of the Senate Banking Committee regardless of party affiliation did not influence anything.
Both the left and right are just different flavors of the same drink. The left are Statists, the right are Corporatists. The Statists cannot retain and expand their power without donations from the Corporatists. The Corporatists cannot amass wealth without the support of the Statists. Neither one will do anything to harm the other because they will only harm themselves.
August 15th, 2011 at 1:08 pm
Uh, riley, who wants “at least one example of a CEO who we could blame for the financial mess”—-how about every one of the big Wall Street banks and Countrywide Financial? That’s a good place to start! If you don’t know who the villians are by now you really haven’t been paying attention!
August 15th, 2011 at 4:06 pm
StatArb Says:
“Top 20 Political Donors, 1989-2010″
Er…this list is a joke. Meg Whitman just spent 144 million of her own money in ONE year trying to get elected governor of CA.
August 15th, 2011 at 4:26 pm
“…We don’t talk much about the old am-Bush plan to privatize social security, but we all know in what pockets the baby-boomers retirement would have ended up if that one had succeeded…”
DeDude,
the Cash Balances, sent, allegedly, to the ‘Social Security Trust Fund’ have been Spent (yes, by ‘Government’) …
the Cash has been swiped (Looted), and IOUs were left in its Place..
and, no, sorry, those Funds are Not “‘Invested’ in “Treasury Bonds”–that variety, at the min., are ‘Non-Marketable’, to say nothing, again, that IOUs are Not equal to Cash..
August 15th, 2011 at 4:34 pm
Actually except for not being marketable those treasury bonds in the trust funds are exactly the same as any other treasury bond. They are backed by the full faith of the US government and can be (and are) cashed in when they expire. Like any other “money in the bank” they are as good as the bank. So far the US government has been far more reliable than any other private sector “bank” you could stick your money into (and with much lower fees).
August 15th, 2011 at 4:38 pm
ancientone I know who the villains in the financial crisis are, but that’s my point. Seems pretty clear that Pearlstein thinks the financial mess was caused by CEO’s who “… financed and supported the growth of a radical right-wing cabal that has now taken over the Republican Party and repeatedly made a hostage of the U.S. government.” The problem with the article is Pearlstein tries to correlate two things that are not correlated and make them the cause of the financial mess. Historically Wall Street supports democrat candidates and democrat causes significantly more than republican. The crisis was either caused by evil republicans or greedy Wall Street, but it cannot be both.
August 15th, 2011 at 7:10 pm
DeDude,
that, @16:34, is, really, an exercise of Sophistry.
Cash, like that which was sent to the ‘Trust Fund’, need not be ‘cashed in’…
the “Treasury Bonds” are nothing more than a Promise of Future Taxation.
follow the ‘bouncing ball’..
Wage-Earners, and their Employers, are Taxed..those ‘Taxes’ (Cash) are sent to the ‘Trust Fund’..the ‘Government’ spends the Cash, and replaces it with a Promise of, still, more Taxation(at a later Date)…
sell the ‘Investment’-Thesis/false ‘Bank’-analogy somewhere else..
the Government/USTreas/”SocSec Administration” has, all, Lied to the American People. that’s the EOS.
August 15th, 2011 at 8:22 pm
DeDude,
There’s one other difference between the treasury securities held by the Social Security Trust Fund besides them not being marketable. Unlike any other security the treasury issues, they are redeemable AT ANY TIME at full face value, meaning that technically the maturity dates are irrelevant.
August 15th, 2011 at 8:23 pm
Mark,
“the ‘Treasury Bonds’ are nothing more than a Promise of Future Taxation”
That is, by definition, a government bond. This is true of all the bonds held by mutual funds, banks, pension funds, insurance companies, and ordinary American citizens.
If the Social Security Trust Fund had instead purchased government bonds from Britain or Germany, would you not expect them to honor their obligations and return the money when the bonds were redeemed ?
August 15th, 2011 at 11:04 pm
Joe,
be Clear, I am not speaking of the ‘difference’ between “Treasury Bonds”, of any sort.
I am speaking of the Difference between Cash, on Account, and (that) Cash being Spent, and replaced with (additional) Promises of Future Taxation.
There’s a huge difference, in the latter case..
start counting the “episodes of Taxation”, and you may begin to see it..
or, differently, Why are you purporting that those Funds need to be ‘invested’ in USTreas securities, at all?
Why couldn’t they, say, through HHS, be used to build Clinics? Hospitals? …through HUD, be used to build Housing? Apartments? …et al., etc…
but, now, because the Cash has been Spent, the ‘Government’ has to go ‘raise Funds’, via Bonds Sales, to ‘come up withe Cash’ …
denial ain’t bringing the Cash back, People have been robbed, and they’re fixin’ to Pay, for it, again..
August 15th, 2011 at 11:54 pm
Mark,
“be Clear, I am not speaking of the ‘difference’ between ‘Treasury Bonds’, of any sort.”
Which I did not address in my response to you.
“I am speaking of the Difference between Cash, on Account, and (that) Cash being Spent, and replaced with (additional) Promises of Future Taxation.”
That chronology is off.
The cash is invested in a bond, and as with any bond issuer, they can use the monies anyway they see fit.
“Why are you purporting that those Funds need to be ‘invested’ in USTreas securities, at all?”
It is federal statute.
“Why couldn’t they, say, through HHS, be used to build Clinics? Hospitals? …through HUD, be used to build Housing? Apartments? …et al., etc…”
And just how would the investment be repaid ?
“but, now, because the Cash has been Spent, the ‘Government’ has to go ‘raise Funds’, via Bonds Sales, to ‘come up withe Cash’ …”
Again, that is how a bond works.
August 16th, 2011 at 6:46 am
MEH;
But even cash would be spent (as all cash is). If social security had placed its trillions in Citi bank (in exchange for a paper slip saying that the trust fund had a deposit and could get that money back when they need it), the money would still be spent – and the trust fund would depend on being able to exchange a “deposit slip” piece of paper for cash. It’s just that instead of the full faith of US government the promise of getting the money back out on demand would be backed by the Fuld faith of Citi bank. Or are you advocating that the trust fund should put the money into some yellow metal (or other asset) whose value swings up and down like crazy. Then they might as well gamble all our money in the stock market.
August 16th, 2011 at 8:24 am
DeDude,
that, which was, ‘SocSec’ Cash could have been the Base for the USG’s own Bank.
see http://www.banknd.com/
at the, very, minimum, SocSec Bank (could/could have) provided an alternative, but, the Current Asset, the Cash, is Gone..
LSS: our ‘current Set-Up’, based, primarily on “by the Fuld faith of Citi bank”, need not be this way..
you should check out/read http://www.amazon.com/History-Money-Banking-United-States/dp/0945466331
again, LSS: the struggle over State/Government Deposits has been one that enlivened Debates, at the min., for the better 2/3rd’s part of out Nation’s History..
if you Buy, and don’t like, that Book, ship it to BR, and I’ll reimburse the Cost+Shipping, to you..
August 16th, 2011 at 10:00 am
So we could call the social security trust fund “USG bank” (that lends all its money to US government) – no difference. However, if you begin letting that “bank” lend to other entities then it begins taking risks (same as sticking its money into the market). As soon as a “bank” lend out money it takes the risk of not being paid back, if it doesn’t it will lose the value of its money to inflation. The social security trust fund (bank) has put all its money into (special) treasuries that are about the most safe investments in the world. There are good arguments both for and against that strategy, but no good arguments for the idea that those investments are “gone”.
August 16th, 2011 at 11:23 am
DeD,
if you, really, think that a ‘Bank’, making Loans, is the Economic equivalent of ‘Buying Equities’, there’s not much more to say..
why you’re vested in the Current Schema–SocSec, as, widely, misunderstood–I have no Idea.
but, to reiterate, the High-Powered Economic Asset–the Cash–that was sent to the ‘SocSec “Trust Fund”‘–is Gone..
August 16th, 2011 at 12:37 pm
Mark,
You keep posting that “the Cash is Gone”.
THAT is how a bond works. Any bond. If you buy a corporate bond, guess what ?, your “cash is gone”, replaced by the bond you PURCHASED. Just as with when you buy a car, your “cash is gone”, replaced by the car you PURCHASED.
Of course, a bond can be redeemed, and as DeDude mentioned, a Social Security Trust Fund bond is the most privileged of Treasury bonds issued to Social Security by the U.S. Treasury, considered the best investment in the world.
August 16th, 2011 at 1:48 pm
MEH; a bank (in this case the social security trust fund “bank”) making a loan (to private entity) is a higher risk than making investments in treasuries. A (SS trust fund) bank making investments in equity market is also a higher risk than making investments in treasuries. And it is not just me saying it all our insolvent private banks seems to act as if they think the same. Depending on who the bank loans money it may be taking a higher or lower risk than by investing in equities (again also depending on the equity). However, Uncle Sam is about the safest “person” to loan your money to, by purchase of treasuries (and that is also what the market say).
The reason I support the current social security system is that it is the safest and least costly way to have a poverty prevention program. It has worked great since its inception and can work great for another 75 years with some minor adjustments. If someone could come up with another better working plan for poverty prevention I would be happy to take a look, but so far all I have seen is some dreams of privatizing that completely ignores how the world actually works.
August 16th, 2011 at 2:26 pm
look, you two, DeD y ‘JF’, obviously have no idea about the ‘Non-Consumer’-Side of Banking/Financial Services..
take a look through.. http://www.banknd.com/treasury_services/ for Starters..
LSS: SocSec need not be a ‘Consumer’ of Financial Assets/Services, it could be the Manufacturer of them.to begin with.
and, again, there Is a difference between ‘a Thing’, and “the Promise to deliver ‘a Thing’”..
August 16th, 2011 at 2:40 pm
You want social security to do financial services??? Talk about government getting bigger; and the S-word. The issue for the social security trust fund is that it has a lot of money that needs a safe investment place. It cannot find a safer place than treasuries. What exactly (specifically) is it you think they could do by becoming a bank that would not involve taking larger risks? I am all for the states having their own banks and using that state bank to finance the states borrowing needs a much lower cost (cutting out the iBank middle men), but social security does not need to borrow (at least not for another 25 years).
August 16th, 2011 at 3:51 pm
DeD,
this..”…I am all for the states having their own banks and using that state bank to finance the states borrowing needs a much lower cost (cutting out the iBank middle men)…”
is, just, the beginning of it..
now, think of all of the ‘Bank Credit’/'Insurance’ guarantees that the USGov hands out to, allegedly, “Private Banks & Insurance Companies” (FHA, SBA, and similar ilk), to say nothing of Fannie, Freddie, and Farmer (Mae/Mac) ..
LSS: whether, or not, you think the ‘SocSec “TrustFund”‘ is ‘money good’, or not, There are efficiencies, in the USGov’s Budget, that need to be found..
August 16th, 2011 at 4:11 pm
DeD y ‘JF’,
see some of this, as well..
Raleighwood Says:
August 16th, 2011 at 12:23 pm
The Right is blind to the windfall exploitation of the financial Elite, and the Left is blind to the windfall exploitation of those with access to Savior State free money.
http://www.oftwominds.com/blogaug11/20-million-unemployed-8-11.html
http://www.oftwominds.com/blogaug11/20-million-unemployed-8-11.html
August 16th, 2011 at 4:39 pm
also, some of this should be of interest..
http://www.ritholtz.com/blog/2011/08/cohan-says-close-wall-street-casion-cut-pay-in-half/
August 16th, 2011 at 11:26 pm
Mark,
You’ve yet to explain how this alternative scheme of yours would even pay back it’s investment, let alone rival the ROI of the Social Security Trust Fund, which has returned 6% and 7% GUARANTEED in the past, and even in these deflationary times is currently returning almost 4.5% GUARANTEED.
Nothing else even comes close.