CT Progressive

So the text of Dodd and Udall’s post-Citizen’s United Constitutional amendment:

Section 1. Congress shall have power to regulate the raising and spending of money with respect to Federal elections, including through setting limits on—

(1) the amount of contributions to candidates for nomination for election to, or for election to, Federal office; and

(2) the amount of expenditures that may be made by, in support of, or in opposition to such candidates.

Section 2. A State shall have power to regulate the raising and spending of money with respect to State elections, including through setting limits on—

(1) the amount of contributions to candidates for nomination for election to, or for election to, State office; and

(2) the amount of expenditures that may be made by, in support of, or in opposition to such candidates.

Section 3. Congress shall have power to implement and enforce this article by appropriate legislation.

It seems like… less than the occasion calls for, to be honest. For example, if my company wanted to spend half-a-million dollars on each of a dozen candidates for office, what would stop me from filing 100 subsidiaries and giving the legal maximum (2 x $2400) that applies to individuals?

That the proposed amendment doesn’t touch corporations directly is understandable, as broad-based corporate personhood amendment might be a bigger lift than Congress can achieve at this point in time, and a narrower version of that which restricts corporate participation in elections could be read to concede the validity of the corporate personhood concept in every other facet of the law. One quote in the Register piece gets at this:

Quinnipiac Law School professor William Dunlap said Dodd’s proposal is a “straightforward way” of addressing the financing of elections without getting into corporate speech and First Amendment issues.

But he was not sure if it meets the senator’s goal of overruling Citizens United, as the power to regulate election spending is only part of the problem.

“Even if Congress has the power to regulate in a particular area, it still may not do so in violation of some other constitutional provision,” Dunlap said.

“As I read the Citizens United case … it is premised on protecting freedom of speech, not on an absence of congressional authority to regulate elections. A court intent on keeping Congress from regulating in the way it has been may be able to rely on the First Amendment to do so,” Dunlap said.

I wonder if an amendment could be tailored to define the contours of a right to participate in the electoral process, but restrict that right to individuals or citizens.

The more I think about it, a serious hurdle in restricting corporate involvement in elections is the question of how you draw a line that prevents corporations from spending while protecting the existence of PACs. A comprehensive approach that asserts the rights of individuals could very well ban PACs, which is fine with me but might lose it a lot of Congressional support.

Anyway, it’s a real puzzle, and while it’s not the perfect Pony Plan for banning corporate involvement, I do appreciate that Dodd got something out on the table so this conversation can begin in earnest.

Two stories have come out in the last couple days that serve as a reminder that not every business actually desires a functioning free market economy.

Barry Lynn and Phillip Longman talk about the economic consequences of business consolidation, suggesting that the lack of domestic job growth over the last ten years is closely tied to anti-competitive behavior:

It is now widely accepted among scholars that small businesses are responsible for most of the net job creation in the United States. It is also widely agreed that small businesses tend to be more inventive, producing more patents per employee, for example, than do larger firms. Less well established is what role concentration plays in suppressing new business formation and the expansion of existing businesses, along with the jobs and innovation that go with such growth. Evidence is growing, however, that the radical, wide-ranging consolidation of recent years has reduced job creation at both big and small firms simultaneously. At one extreme, ever more dominant Goliaths increasingly lack any real incentive to create new jobs; after all, many can increase their earnings merely by using their power to charge customers more or pay suppliers less. At the other extreme, the people who run our small enterprises enjoy fewer opportunities than in the past to grow their businesses. The Goliaths of today are so big and so adept at protecting their turf that they leave few niches open to exploit.

Over the next few years, we can use our government to do many things to promote the creation of new and better jobs in America. But even the most aggressive stimulus packages and tax cutting will do little to restore the sort of open market competition that, over the years, has proven to be such an important impetus to the creation of wealth, well-being, and work. Consolidation is certainly not the only factor at play. But any policymaker who is really serious about creating new jobs in America would be unwise to continue to ignore our new monopolies.

Their argument touches on manufacturing, where monopoly practices have caused stagnating product development (in many industries, a single manufacturer often produces the products for nearly every “competing” company in the field), to retail, where the market power of large chains causes de facto industry-wide price fixing even in the absence of collusion. The stifling of new inventions would seem to disproportionately impact a knowledge-industry state like Connecticut.

Monopoly power has also become a hot topic in healthcare coverage, as most states are dominated by a small number of providers; this was addressed in part by the creation of exchanges, but national exchanges (and a repeal of the anti-trust exemption for the insurance industry) don’t seem to be on the table at this point. A study cited in the article shows that in 80% of mergers, the new (larger and theoretically more efficient) company raises their prices when faced with less competition.

None of this, of course, is surprising, but somehow the national debate about job creation is hitched to a belief that what we should do what business wants, because what business wants is more and better competition. In a lot of cases, that’s exactly the opposite of what business wants. Competition cuts profits; new products create headaches and unpredictability.

The other story that came out is about our less-than-enlightened business lobbyists here in Connecticut, who see the economic suffering of the state’s residence as a great opportunity to weaken environmental regulations in the state. How lifting a regulation that you can’t dump battery acid in the river (or, as cited in the article, paint into the groundwater) is going to create jobs is beyond me — but it serves as a useful reminder of how cynical the politics around these issues can be.

There seems to be conflicting visions of what our economy is for – not that you’d be able to tell from watching C-SPAN. But the rise of Friedman/Reagan economics wasn’t so long ago that people don’t remember a time before it, and it wasn’t so long ago that we can’t contemplate a different model to follow it.

What’s the purpose of industry? To build useful things? To constantly improve the quality of life in our society? To be a strong component in the fabric of our communities? Too often, the answer is that the purpose is simply to generate capital, that this alone is sufficient to justify the human costs of profit-enhancing decisions; an ethic of ownership over work that trends naturally towards monopolies and rent-seeking over the (imo more desirable) elements of competitive, community-oriented businesses. From the excellent wikipedia description of “rent seeking” (wanted to check that I was describing the right phenomenon):

From a theoretical standpoint, the moral hazard of rent seeking can be considerable. If “buying” a favorable regulatory environment is cheaper than building more efficient production, a firm will choose the former option, reaping incomes entirely unrelated to any contribution to total wealth or well-being. This results in a sub-optimal allocation of resources — money spent on lobbyists and counter-lobbyists rather than on research and development, improved business practices, employee training, or additional capital goods — which retards economic growth.

That seems a pretty tidy description of the situation we find ourselves in right now. And the solution? The big-picture version from Lynn and Longman sounds pretty compelling:

When we get serious about this task, we will find that an entire political economic model lies ready for our use—the one shaped largely by the populists in Congress and the Roosevelt administration during the second New Deal. Before we can make use of this ready-made system for distributing power and opportunity, however, we will first have to break up the intellectual monopoly that has been forged over so much political economic policymaking in Washington today. The generation of political economists who understood the theory and practice of antitrust as devised by the late New Dealers are mostly retired or dead, and the academic economists who today dominate most discussions either have little understanding of the political nature of antimonopoly law or are openly hostile.

That’s why our first step must be to repopulate our discussions of political economics with the voices of the people who actually make our economy go. After all, real entrepreneurs and real scientists and real executives and real bankers and real farmers and real software engineers and real venture capitalists tend to understand quite well how real power is used against them. Just as it is they who know better than anyone else what freedoms they require to go about the task of putting their fellow Americans back to work.

In the news:

Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors. [...]

Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers. Companies do not withhold income taxes from contractors’ paychecks, and several studies have indicated that, on average, misclassified independent workers do not report 30 percent of their income.

Not having unemployment insurance also means that you lose the safety net that keeps you from economic ruin when your job disappears (do they give pink slips to independent contractors?) The article goes on to mention that independent contractors can’t form unions, and generally don’t receive overtime. Misclassification is a tool that’s used to isolate people from their co-workers and the protections of labor law. It’s arguably the crown jewel in a range of modern abuses in the private sector, including elimination of breaks, tip garnishment, coercing workers not to file for worker’s comp, off-the-clock work, and illegal deductions from paychecks (also known as straight-up “stealing”). There’s a great and extensive report on how widespread these problems are for working-class Americans here. (PDF link)

One thing that jumps out from the article:

“This denies many workers their basic rights and protections and means less revenues to the Treasury and a competitive advantage for employers who misclassify,” said Jared Bernstein, who as executive director of Vice President Joseph R. Biden Jr.’s Middle Class Task Force has helped orchestrate the administration’s campaign against misclassification. “The last thing you want is to give a competitive advantage to employers who are breaking the rules.”

I’d argue that you’d actually want to provide a competitive disadvantage to employers that engage in these kinds of practices: businesses that cheat their workers as a matter of course weaken the fabric of our entire society and pull the quality of life downwards for everyone, not just those working at their firm. The cost of shoveling risk onto the rest of society should be priced into the economic and regulatory systems in which these companies operate; as it stands, the enforcement effort is merely seeking lost wages and back taxes, so there’s no financial incentive for companies to proactively correct these issues. Serious penalties (or, at the extreme, a corporate three-strikes law) would provide a stick; using those penalties to provide a credit or benefit to companies that follow best practices could be a worthwhile carrot.

Finally, in the category of “accidentally sharp critique of capitalism:”

“The goal of raising money is not a proper rationale for reclassifying who falls on what side of the line,” said Randel K. Johnson, senior vice president with the United States Chamber of Commerce.

Yes, it’s true that making an extra buck isn’t a moral rationale for screwing with your workers, though I’m not sure Randel really thought that through before giving a quote to the paper of record.

If this comes to pass, then maybe I’d say that we should have trusted the Senate Democrats and all of their manuevering this whole time.

That’s a big if. But progressives are due a pleasant surprise by now, don’t you think?

Dick Blumenthal will be stopping by at Yale on Monday to talk with the College Democrats.

Hopefully he asks them about technology issues, since he might do some real damage to the modern internets if he wages his fight against MySpace from the floor of the U.S. Senate.

Another reason why we’ll miss Senator Dodd.

Senator Chris Dodd (D-CT) announced today that he will be introducing a constitutional amendment in the coming days to reverse the Supreme Court’s recent decision in Citizens United v. Federal Election Commission. The decision overturned 100 years of precedents to come to the unjustified conclusion that corporations deserve the same free speech protections as individual Americans.

“Money is not speech,” said Dodd. “Corporations are not people. And in the wake of one of the most radical decisions in the Supreme Court’s history of campaign finance jurisprudence, a constitutional amendment is necessary to fully restore the trust and voice of the American people. If corporations – foreign as well as domestic – are allowed even greater and more direct influence over our elections, our democracy as we know it will cease to exist. I won’t stand for that. I urge my colleagues, and the American people, to join me in defense of democracy by supporting this amendment and other interim steps to mitigate the damage done by this decision.”

Amending the Constitution — turns out it’s good for something other than right-wing fundraising after all.

Not to give a platform to a lame duck, but Rell’s outrage over the healthcare reform bill is ridiculous on two fronts:

A provision written into the massive bill will allow the federal government to pick up 100 percent of the cost of Medicaid expansion in Nebraska to court U.S. Senator Ben Nelson’s vote.

“The inequity of this provision is astonishing,“ Rell wrote in her letter to Blumenthal. “The doling out of favors for senators is appalling. The cost of this federal health care bill is beyond comprehension because of all the special provisions included to garner the 60 votes for passage.” [...]

“While everyone has received something, Nebraska’s “gift” is particularly galling,” Rell wrote in her letter. “In this time of extraordinary fiscal challenge, when states are facing record budget deficits and are seeing HUSKY and Medicaid case loads growing, all could use 100 percent reimbursement.”

First, while Nelson secured an additional grant of $45 billion for Nebraska’s Medicaid expenses over the next decade, our own Senator Dodd laid claim to more than twice that for the UConn Health Center. So it’s not obvious that Connecticut got the short end of the deal by any measure.

But more to the point, that Rell is jumping aboard a conservative protest to see 100% Federal Medicaid funding in all 50 states is bizarre, since liberals inside of Congress and out would love to see Medicaid become a fully Federal program. As it stands, with Medicaid structured as a matching-funds programs, benefits are significantly less generous in states with a smaller tax base – arguably, the states that have the greatest need for Federal support for low-income healthcare coverage. As Tom Harkin says (c/o Ezra Klein):

“When you look at it, I thought well, God, good, it is going to be the impetus for all the states to stay at 100 percent [federal funding],” Harkin told reporters. “So he might have done all of us a favor.”

While Connecticut is not short on poverty and polarization, we’re also not one of the states that’s unable to afford our share of the matching dollars. While funding services for the poor apparently has less electoral upside in the state than cutting taxes for the wealthy, Rell’s demand to federalize Medicaid nationwide would not, I imagine, do very much to cut the taxes of the state’s top-income-bracket residents. But I’m sure someone sent Senator Harkin of Iowa her letter, and that he’s got a little smile on his face thinking of the day when he’ll be able to pull her protest out of the file as evidence that even wealthy Connecticut’s Republican Governor supports this massive expansion of Federal spending.

When that day comes, even Rell’s harshest critics will have to acknowledge that she’s done some good for the country, however tangentially.

I’ve been following the debate over Himes’ vote against the House “Jobs Bill” with some interest. The measure, according to Himes, is “a $75 billion Democratic spending plan which largely expanded programs in the American Recovery and Reinvestment Act.”

The first interesting debate is one over whether the vote was principled or politically opportunistic. I lean towards the latter, but have to admit that the technocratic argument against Himes’ position comes off a lot better in print than the political one, as you can see in this CT Post article. And once a consensus starts to gel that constituents can’t really “reach” their elected representative with their concerns (this quote from the Post article – “While I think of everybody I represent, I don’t cast votes according to what any particular small minority agitates for” – gets at what a lot of activists and DTC people are perceiving), then you may as well design your criticisms to sound good when they’re picked up in local media instead of targeting them to what you might perceive that electeds’ perspective and priorities to be. And it’s certainly better to make a Congressman argue with Paul Krugman than My Left Nutmeg.

But that characterization of the spending package kept ringing out in my mind – the idea that the bill was an extension of the early 2009 stimulus measure. If you remember, the House passed a package heavily tilted towards the more effective spending measures, which were then shifted dramatically towards less-effective tax cuts by the Senate. (A comparison of differences between the two bills can be seen here – definitely worth checking out).

In a way, redirecting TARP money towards local governments, direct aid to the unemployed (extended healthcare and unemployment), housing, and transit (as NYC commuter rail faces service cuts due to budget shortfalls) asserts that the House was correct in its original proposal, which Himes seems to acknowledge when he complains that too large a part of the original stimulus has yet to be spent. A more detailed list of the supplemental bill’s programs (which actually add up to a little over $150 billion) can be seen at Pelosi’s legislation blog, and, minus the highway spending, sounds relatively fast-acting.

These institutions being what they are, I understand that “The House Was Right” is not going to be at the top of any Pelosi press releases on the subject. Still, as both a policy and politics matter, it seems a tragic mistake for Representatives of any stripe (and Democrats in particular) to advance the notion that our government has done all it can or should to restore stability at all levels of the economy.

“My fellow Americans, it’s true that we bailed out the banks, hedge funds, and insurance companies that made such serious errors in recent years. We did it because we had to – our livelihood depends on a healthy financial services industry. But their livelihood depends on the health and well-being of the American people, and that’s why we will be introducing a financial speculation tax to provide healthcare to every uninsured American starting next year.”

Or, we could just give them the money and not ask for anything back. Whatever.

Discussion has been ramping up this week over the Federal Reserve, as Ben Bernanke’s confirmation for another term as Chair begins. Progressive superhero Bernie Sanders has put a hold on the nomination, while our own Senator Dodd is apparently the point man for ensuring the confirmation goes smoothly.

Bernanke and many supporters appear to be claiming that politicizing the Fed’s policies in the context of the confirmation would undermine the independence of the Federal Reserve; Dodd seems to be leaning on the idea that the Fed has done a great job, and that it’s simply the regulatory system that needs updating.

I’m torn on the subject – while there’s been some fascinating left-right alliances forming, I can’t help but think there’s a tension between the differing philosophies, and I’ve seen progressives burnt by one or two of our own acting as “beards” for extreme conservative interests enough times to hesitate before jumping in.

It’s absolutely true that Bernanke has not done many of the beneficial things that it is in his power to do. The most persuasive criticism is that he has pursued the well-being of banking and trading institutions over the Fed’s stated policy of pursuing full employment. Put another way, we gave the money to the wrong people – stocks are up, and jobs are down. The big-picture critique from the left might be that the actions taken to stabilize the economy have only served to perpetuate the mugging of the poor and middle class by organized wealth, and that the current policy reinforces the offensive “trickle-down” theory of economic well-being at the same time that it illustrates “trickle-down’s” ultimate failure.

However, it seems to me that hanging some bureaucrat lets the people that really screwed the economy off the hook, and would serve those who want to eliminate government regulation entirely. Remember the argument from last fall that promoting minority homeownership caused the entire collapse of the American economy? I think the hard right – the Grover Norquists of the world – has understood from the first whisper of the word “collapse” that by the end of the day the public would demand a pound of flesh for all the suffering generated by these financial institutions, and I think they’re right. The thing is, they’ve been casting around for one that lets the traders and the idle billionaires that love them get off unmolested, and Bernanke is just the latest.

Of course, Dodd is right that the regulatory regime isn’t strong enough, but doesn’t seem to get that there’s something that isn’t being satisfied out here in the wilderness of public opinion. That doesn’t mean that he should kick over the podium and strangle Bernanke on the Senate floor – but being nice, being fair, and delivering a speech about how he supports this nominee and their independence without reservation (with some toughness down in the twenty-fourth paragraph) is not doing the job of communicating that our Senator is as unhappy as we are. (If you didn’t read it from the link above, here it is again: Dodd Supports Bernanke’s Confirmation, Calls for Improvements to the Federal Reserve).

It’s frustrating, since all the conditions for an epic shift in national priorities have been in place for a couple of years now: between Iraq, Katrina, and the financial sector meltdown, Americans seem to have gotten exactly how ruinous conservative policies are for our country. With Afghanistan, the ever-shrinking healthcare reform plan, and the sustained practice of treating criminals like princelings so long as they work south of Chambers, the Change We Need is not looking very much like the Change We Wanted in the First Place. When progressive activists start lining up behind initiatives from the Americans for Tax Reform, there’s some real trouble brewing – to me, that says that our ability to believe there’s real reform around the corner is just about exhausted.