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How the Globalists Ceded the Field to Donald Trump

Mon, 19 Mar 2018 09:00:00 +0000

This article will appear in the Spring 2018 issue of The American Prospect magazine. Subscribe here. When it comes to grasping the dynamics of globalization and the backlash against it, the media depiction of Donald Trump’s tariff wars revealed that the trade mainstream is as crackpot in its own way as Trump is—and that Trump is the beneficiary of their myopia. Let me explain. For three decades, the presidential wing of both U.S. parties, cheered on by orthodox economists and financial elites, has sponsored a brand of globalization that serves corporations and bankers but ignores the impact on regular people. This disparate impact is invariably swept aside with the usual platitudes about free trade being efficient and protectionism being narrow-minded and economically irrational. We were treated to those homilies, ad nauseam, after Trump imposed tariffs on steel and aluminum. What’s forgotten is the fact that there is more than one form of globalism. In contrast to today’s brand, the global economic system devised at Bretton Woods in 1944 was a radical break with laissez-faire. The founders of the postwar system had vivid memories of the bitter fruits of rampant capitalism—depression, fascism, and war. They wanted to build a stable and egalitarian form of mixed economy, so that this history would never be repeated. But tragically, it is being repeated today, as global markets run riot and seed neo-fascist backlash. It was no accident that the chief architect of Bretton Woods was John Maynard Keynes. The global architecture invented at Bretton Woods was intended to complement and bolster high-growth, full-employment economies at home. Private financial speculation was contained and reconstruction funds were substantially public. For three decades, the West combined high rates of growth with increasing equality and security for ordinary citizens. But a major shift in both power and dominant ideology has turned the global marketplace back into something more like the pre-Roosevelt system. “Trade” deals have been deployed to dismantle managed capitalism. Working people have not only suffered; they have lost confidence in globalist elites—and worse, in government itself and even in democracy. This is a system-wide pathology. That’s why the backlash, and the embrace of ultra-nationalist strongmen, looks so similar throughout the West. The more that bien pensants double down on globalization, the more defections they invite and the more leaders like Trump we get.   THIS HISTORY IS the subject of my recent book, Can Democracy Survive Global Capitalism? As I observe, the postwar social contract was unique in the history of capitalism—a combination of lucky accidents and power shifts. These included the disgrace of laissez-faire and the Republican Party in the Great Crash; the radicalism of Franklin Roosevelt; the enhanced prestige of government in surmounting depression and winning World War II (in a country normally suspicious of the state); the legacy of wartime planning; the enhanced power of organized labor and the regulatory repression of organized capital; the role of the dollar in a fixed–exchange rate system; and the threat of Bolshevism, which made America urgently supportive of European reconstruction using substantial state-led planning. The postwar experience demonstrated that a mixed economy can be more socially just and more economically efficient than a laissez-faire one. We assumed that this revolution in economic theory and policy was permanent and the new normal. But we overlooked the latent power of capital in an economy that remains fundamentally capitalist. When bankers and corporations regained their usual political power in the aftermath of the economic turmoil of the 1970s, they were able to overturn much of managed capitalism. The new globalism—the use of “trade” deals to undermine domestic regulation and worker protections—became a key instrument. Policy elites were oblivious to the slowly building political consequences, which culminated in the election of Trump and his co[...]

Congress Says WOOFF on Guns

Fri, 16 Mar 2018 18:23:07 +0000

AP Photo/Susan Walsh Louisiana Senator John Kennedy in Washington On a day when American students and their supporters marched to demand stricter gun laws and to memorialize 17 people brutally killed at a Florida high school, the news broke that Republican Senator John Kennedy of Louisiana intended to file an animal protection bill. The move came about 48 hours after the death of 10-month old puppy on a Houston to New York flight after United Airlines employees forced the owners to put the animal in overhead bin. I will be filing a bill tomorrow that will prohibit airlines from putting animals in overhead bins. Violators will face significant fines. Pets are family. — John Kennedy (@SenJohnKennedy) March 14, 2018 His compassion for puppies is commendable. But Kennedy proposes to take zero action on the gun violence that kills schoolchildren. OK, people love puppies, and animal welfare is an important issue. Few owners want to consign an animal to an airplane cargo hold if they can avoid it: Passengers take small pets on planes so they can be stowed safely under a seat. People for the Ethical Treatment of Animals (PETA), the animal welfare advocacy group, said that a certain measure of responsibility for the sad episode rested with the people transporting the pet. Most others faulted the crew for exercising poor judgment. The Harris County District Attorney’s Office (Houston is the county seat) has opened an investigation into the pet’s death. Not content to let United, Harris County, or the court of public opinion handle the issue, Kennedy stepped in with the Welfare Of Our Furry Friends Act, or WOOFF: Today, I introduced the Welfare of Our Furry Friends Act, also known as WOOFF, w my colleague @SenCortezMasto. Our bill directs the @FAANews to create regulations to prohibit the storing of a live animal in any overhead compartment and establish civil fines for violations #WOOFF — John Kennedy (@SenJohnKennedy) March 15, 2018 Kennedy’s motivation for swift action on the incident is unclear. (Although Louisiana Voice blogger Tom Aswell offered this insight about Kennedy in January, “Kennedy, in constant search of a TV camera and microphone, has now gone beyond absurdity in opposing more stringent background checks.”) All 50 states have felony animal cruelty statutes. There are prohibitions in the Texas penal code pertaining to non-livestock animals, including “transporting or confining an animal in a cruel manner.” The WOOFF bill is the boldest expression yet of the Republican Party’s singular failure to come to grips with American life as people live it, rather than the conservative fantasyland were men are men, women are subservient, and children are seen but not heard. In one year, Republicans have stripped health care from millions and reduced taxes on 1 percenters and corporations who should pay millions more. They have countenanced more nonsense and ineptitude from the 45th president than the previous 44 put together, while the minions toiling for said chief executive continue to rip the guts out of the federal government. Republican lawmakers have failed to come up with even a token attempt to declare independence from NRA dollars. Instead, one of their number exerts more legislative energy over a dead pet than dead children and their teachers. It’s not that puppies are cuter than high school students. Louisiana, of course, is a firm gun rights state. Last October after the Las Vegas concert shootings, the worst mass shooting in U.S. history, Kennedy told Politico, “I don’t think we ought to punish 80, 90 million gun owners who have a right to own a weapon under the Constitution because of the act of one idiot,” “Just like I don’t think we ought to condemn all Muslims because of the act of one jihadist.” His career donations from the NRA total $215,788. While some of Kennedy constituents offered a few attaboys on Facebook over his decision to offer the pet protection legislation, most of the posters were appalled. [...]

Welfare Work Requirements Won’t Help Puerto Rico’s Shattered Labor Market

Fri, 16 Mar 2018 17:43:14 +0000

  JUAN LUIS MARTINEZ/GDA via AP Image Puerto Rico Governor Ricardo Rosselló speaks in San Juan trickle-downers_35.jpg In his annual State of the Commonwealth speech this month, Puerto Rico Governor Ricardo Rosselló announced a highly anticipated and in many ways conventionally conservative package of policy proposals to address the island’s ongoing economic and energy crises: privatizing the island’s battered energy grid, cutting corporate and individual taxes, and reforming the education system through charter schools and educational vouchers. Tucked away near the end of the governor’s speech and overshadowed by such front-page proposals was a call to enact work requirements for welfare recipients on the island. “It’s important that we protect and strengthen programs for the most vulnerable,” said Rosselló. ”Likewise, we must incentivize those that can work to find dignified work and insert themselves in the economy.” Puerto Rico’s unemployment rate was almost 11 percent in January. The commonwealth’s labor participation rate has recovered slightly from a record low of roughly 39 percent in October, but still ranks among the lowest in the world. In this context, pushing as much of the island’s population, including welfare recipients, to reenter a labor market in which non-welfare recipients can’t find work looks positively perverse. The requirements can only be understood as a capitulation to the demands of the seven-member federal oversight board tasked with guiding the island through its fiscal crisis. Fundamentally, the proposal fails to take into account the dearth of jobs on the island after a decade of recession and two devastating hurricanes. Since 2006, when tax breaks that had brought manufacturers to the island expired, hundreds of thousands of jobs have disappeared from Puerto Rico. Included in Rosselló’s policy rollout was a reduction in the number of executive-branch agencies from 188 to 35 in attempt to make government less expensive. Roughly a quarter of Puerto Rico’s workers are employed by governments and agencies that could face the ax or funding cuts. Rosselló  has said that if a welfare recipient cannot find employment, they will be able to do community work, volunteer, or work at a nonprofit organizations. “Given how weak the labor market is on the island, one concern with imposing the work requirement is whether there would be enough jobs to cover the increase in the number of people looking for work,” says Marie Mora, economics professor at the University of Texas Rio Grande Valley. “This might lead to even more net out migration from the island, which has already hit a record high.” As further incentive to work, Rosselló also pledged to work to extend the Earned Income Tax Credit (EITC) to working Puerto Ricans. For that, he will first need the support of President Trump and Congress—the very same Congress that excluded Puerto Rican residents from a new $2,000 child tax credit in the Republican tax overhaul. Mora supports the idea of incorporating an EITC in the island’s tax structure, but worries that such incentives won’t be nearly as effective if not paired with an increase in the supply of jobs, particularly jobs matching worker skill sets. As well, the governor’s plan seems to reveal an unfamiliarity with the actual composition of Puerto Rico’s welfare rolls. The governor estimated this month that between 50 and 60 percent of the more than 1.2 million Puerto Ricans currently receiving benefits from the island’s nutritional welfare program Programa de Asistencia Nutricional, or PAN, could be required to work in order to receive assistance. Yet according to recent figures from Puerto Rico’s Department of Family Affairs obtained by San Juan newspaper El Vocero, the number of Puerto Ricans that would fit within the parameters of even the most general of working requirements (adults between 18 and 64 years old, currently unemployed, and w[...]

Selection of Pompeo Solidifies Trump’s Position with Koch Brothers

Wed, 14 Mar 2018 15:57:52 +0000

(AP Photo/J. Scott Applewhite) Mike Pompeo arrives at the Capitol to brief members of the House Intelligence Committee on May 16, 2017. I’ve long said that Donald J. Trump would remain U.S. president as long as the Koch brothers deemed it so. After all, the billionaire siblings and political pooh-bahs all but own the House of Representatives, being largely responsible for electing the Republican majority in 2010. In our system of government, any plausible effort to remove the president from office begins with the House, the only body that can issue articles of impeachment. In short, Trump needs the Koch brothers in his corner if he’s to avoid that fate. Having signed their top priority—massive tax cuts—into law, he’s a little vulnerable now. In 2016, both Charles and David Koch, principals in Koch Industries and builders of a vast, right-wing political infrastructure, made a big show of their contempt for Trump. Charles compared the choice of either Trump and Hillary Clinton to one between a heart attack and cancer. David declined to attend the Republican National Convention, to which he had served as a delegate in 2012, when he hosted a big party. Whatever one thinks of Paul Manafort, the former manager of Trump’s presidential campaign who has since been indicted for conspiracy against the United States, he exercised keen political judgment when he pushed Trump to offer Koch toady Mike Pence the running-mate slot, even after the Republican standard-bearer had reportedly promised it to Chris Christie, who was then the reviled governor of New Jersey. That ensured a measure of Koch support for Trump in the general election. But it also provided the Kochs with an insurance policy of their own: Should Trump get out of control, the Koch brothers not only had a Congress that would likely serve up impeachment papers should they give the signal; they had a doer of their biddings in line to take Trump’s place. With his pick of CIA Director Mike Pompeo to replace Secretary of State Rex Tillerson, Trump shows once again that he knows on which side his bread is buttered. Pompeo joins a cabinet that is already heavily sprinkled with Koch acolytes and pals, including Secretary of Education Betsy DeVos, a Koch network donor; Secretary of Commerce Wilbur Ross, friend of David Koch; and Secretary of Interior Ryan Zinke, the former congressman who is determined to make it possible for Koch Industries to mine uranium on public lands. But Pompeo holds the distinction, in his former guise as a member of Congress, of being described by in a 2016 tweet as “the #1 all-time recipient of #KOCH Industries $$$.” Joe Romm of ThinkProgress describes it this way: In just four election cycles, 2010 through 2016, Pompeo received: $335,000 from Koch Industries employees (including $92,000 just from the Koch family); $69,000 from the Koch Industries PAC; $417,175 from Americans for Prosperity (which is the right-wing advocacy group founded by the Koch brothers); plus another $87,532 from “Other outside groups heavily funded by the Kochs. That’s over $900,000 to buy one Congressman. So now, we’re about to have a secretary of state who denies the role of human activity in climate change, which is just as the Koch brothers, who rule over a conglomerate rooted in fossil fuels, would have it. And Trump just bought himself that much more insulation against any possibility of a Republican-majority House of Representatives turning on him. This is what’s a stake in the 2018 midterms. For Trump, it’s not about what legislation he passes or doesn’t. It’s about survival in office, and his ability to use the executive branch to turn federal agencies into deregulatory, stunted bodies for the benefit of himself and a handful of his wealthy pals. The Plunder Project™ continues. [...]

America's Shkreli Problem

Tue, 13 Mar 2018 11:18:08 +0000

AP Photo/Susan Walsh Pharmaceutical chief Martin Shkreli speaks on Capitol Hill in Washington On Friday, Martin Shkreli was sentenced to seven years in prison. What, if anything, does Shkreli’s downfall tell us about modern America?   Shkreli’s early life exemplified the rags-to-riches American success story. He was born in Brooklyn, New York, in April 1983, to parents who immigrated from Albania and worked as janitors in New York apartment buildings. Shkreli attended New York’s Hunter College High School, a public school for intellectually gifted young people, and in 2005 received a bachelor’s degree in business administration from Baruch College.  But soon thereafter, Shkreli turned toward shady deals. He started his own hedge fund, betting that the stock prices of certain biotech companies would drop. Then he used financial chat rooms on the Internet to savage those companies, causing their prices to drop and his bets to pay off.  In 2015, Shkreli founded and became CEO Turing Pharmaceuticals. Under his direction Turing spent $55 million for the U.S. rights to sell a drug called Daraprim. Developed in 1953, Daraprim is the only approved treatment for toxoplasmosis, a rare parasitic disease that can cause birth defects in unborn babies, and lead to seizures, blindness, and death in cancer patients and people with AIDS. Daraprim is on the World Health Organization’s list of Essential Medicines. Months after he bought the drug, Schkreli raised its price by over 5,000 percent, from $13.50 a pill to $750.00.  Shkreli was roundly criticized, but he was defiant: “No one wants to say it, no one’s proud of it, but this is a capitalist society, a capitalist system and capitalist rules.” He said he wished he had raised the price even higher, and would buy another essential drug and raise its price, too.  In February 2016, Shkreli was called before a congressional committee to justify his price increase on Daraprim. He refused to answer any questions, pleading the Fifth Amendment. After the hearing Shkreli tweeted, “Hard to accept that these imbeciles represent the people in our government.”  Shkreli was subsequently arrested in connection with an unrelated scheme to defraud his former hedge fund investors. In anticipation of his criminal trial, Shkreli boasted to the New Yorker magazine, “I think they’ll return a not-guilty verdict in two hours. There are going to be jurors who will be fans of mine. I walk down the streets of New York and people shake my hand. They say, ‘I want to be just like you.’”  During his trial, Shkreli strolled into a room filled with reporters and made light of a particular witness, for which the trial judge rebuked him. On his Facebook page he mocked the prosecutors,and told news outlets they were a “junior varsity” team.  He retaliated against journalists who criticized him by purchasing internet domains associated with their names and ridiculing them on the sites. “I wouldn’t call these people ‘journalists,’” he wrote in an email to Business Insider. He said on Facebook that if he were acquitted he’d be able to have sex with a female journalist he often posted about online.  After his conviction, Shkreli called the case “a witch hunt of epic proportions, and maybe they found one or two broomsticks.” As she imposed sentence last Friday, the judge cited Shkrili’s “egregious multitude of lies,” noting also that he “repeatedly minimized” his conduct.  Shkreli’s story is tragic and pathetic, but I ask you: How different is Martin Shkreli from other figures who dominate American life today, even at the highest rungs? Shkreli will do whatever it takes to win, regardless of the consequences for anyone else. He believes that the norms other people live by don’t apply to him. His attitude toward the law is that anything he wants to do is okay unless it is clearly illegal—and even if illegal, it’s oka[...]

Donald Trump's Good Week

Mon, 12 Mar 2018 21:13:51 +0000

AP Photo/Andrew Harnik President Donald Trump in the East Room of the White House Is Donald Trump some kind of feral genius whose intuition takes him into policy realms where lesser leaders fear to tread? He takes willful pleasure in not reading briefing books or checking with experts, but in trusting his ample gut. Exhibits A and B, which dominated the news last week, were his ordering of tariffs on aluminum and steel, to the horror of every orthodox trade expert (and the joy of his base); and his even more abrupt decision to accept the invitation of North Korean leader Kim Jong-Un for a face to face meeting. Might either of these impulsive decisions produce policy breakthroughs, proving the conventional view of both substance and process wrong? Take the case of Korea first. Ever since the Clinton administration, the North Koreans have tried to pull the United States into a process that would result in security guarantees for themselves and lifting of sanctions, in exchange for some kind of limits on their nuclear program. But those limits never quite materialize. After more than three decades of false starts under three generations of Kims, starting with the current leader’s grandfather Kim Il-Sung in 1994, North Korea’s program of intercontinental missiles and nuclear weapons has only moved relentlessly forward. Given the logic of Mutually Assured Destruction, Washington has lost leverage over Pyongyang with every passing year. The diplomacy is even more complicated now, because a left-of-center president governs in South Korea. To the consternation of the U.S., which has wanted to keep North Korea isolated, South Korean President Moon Jae-in has made multiple overtures to the North to move towards more normal relations. It was a South Korean emissary who passed to Trump Kim’s invitation to meet, which Trump impulsively accepted. Kim has already agreed to temporarily suspend nuclear and missile testing as a gesture to the South. What sort of agreement could conceivably result? Ironically, a rough model is the deal with Iran, a bargain negotiated by Barack Obama and one that Trump scorns and regularly threatens to up-end. But Iran’s nuclear program is far less developed than Korea’s and Iran doesn’t have intercontinental missiles. What might a grand bargain look like? North Korea would have to promise to freeze or roll back its nuclear program. In exchange, the U.S. would lift sanctions and maybe even pull out some troops. Kim has called for a nuclear-free Korea. There would be more normalization of relations between South and North, and the whole deal would be guaranteed by the great powers, including China. To say that this is improbable is an understatement. Even assuming the most competent and nuanced of diplomacy—and remember we are talking about Donald Trump—Kim is not about to give up his nuclear program nor is he likely to subject it to verifiable international inspection, an offer that has been regularly made, and then slow-walked, and then withdrawn. The best we might hope for would be a series of “trust-building” baby-steps: a moratorium on the name-calling; a suspension of tests; and more moves towards rapprochement between South and North, with Washington’s blessing. This might give both Trump and Kim some favorable publicity, but if it did nothing to slow the development of stronger bombs and longer-range missiles, the advantage would be Kim’s. The meeting may never happen, as these risks are explained to Trump. If the meeting does happen, it could degenerate into insults. The worst case—that Kim’s charm offensive tricks Trump into a deal that advantages North Korea—is probably unlikely. Trump loves the bold stroke, but even Trump doesn’t want to look like a fool. The tariffs on steel and aluminum are another story. To hear the mainstream press tell it, this was another abrupt, impulsive decision that surprised Trump’s adv[...]

What Elizabeth Warren Is In For

Sun, 11 Mar 2018 23:13:25 +0000

(Ron Sachs/picture-alliance/dpa/AP Images) Warren during a hearing in the Senate Committee on Banking, Housing, and Urban Affairs on January 23, 2018. From the moment he began running for president in 2015, it was apparent that Donald Trump was a kind of political idiot savant, even if the idiot part blinded so many people to the savant part. He seemed to know nothing about anything, yet he had an intuitive sense of what would get certain voters angry and excited. And he was nearly alone in believing there was almost nothing he couldn't get away with; his off-the-cuff assertion that "I could stand in the middle of Fifth Avenue and shoot somebody, and I wouldn't lose any voters, OK? It's like incredible" will stand as one of the most profound insights of the entire Trump era. Trump could also take the preferred tactic of the fourth-grade bully—mocking nicknames for those he seeks to dominate—and turn it into a potent political weapon. Liddle Marco, Lyin' Ted, Crooked Hillary—in every case, Trump found a point of weakness, then jabbed at it with the bluntest instrument he could find, which turned out to be an excellent way to persuade the American electorate, or at least portions thereof. He hasn't stopped with the nicknames since he became president, even if all of them don't have the effect he wants (to take just one example, I'm pretty sure Kim Jong-Un is only too happy to be called "Little Rocket Man," since he is quite proud of his missiles). And he will, I can promise you, bestow a nickname on whoever turns out to be his Democratic opponent in 2020. One potential candidate, Senator Elizabeth Warren, already has her nickname, one Trump uses as often as he can, no matter how many people tell him it's racist and insulting, not to Warren but to Native Americans. On Saturday at a rally in Pennsylvania he somehow found occasion to yet again refer to Warren as "Pocahontas," and on Sunday, Warren was on multiple morning shows talking about 2020 and her family history. It's worth considering, because if Warren does run (at the moment she puts off the question by speaking only in the present tense, i.e., "I am not running for president"), Trump will be throwing the nickname around constantly, and Warren will have to answer questions about it just as often. This is not the first time Warren has dealt with these questions (they came up in her first run for Senate in 2012), but she now has what is obviously a well-thought-out plan to deal with it. In case you aren't familiar, the issue came up because Warren's family lore has it that her mother was part Native American. During her time as a law professor at Harvard, she was listed in a director of minority faculty and the university included her in materials about faculty diversity. But there's no evidence that she ever used that heritage for any kind of professional advancement, and the people who hired her at the University of Pennsylvania and then at Harvard have publicly stated that it had no role in her hiring (Warren was an academic superstar who needed no extra help in getting jobs). But the truth of the story doesn't really matter. If Warren does run for president, and if she does then become one of the strongest contenders, and if she does then become the Democratic nominee, Trump and his allies will construct a detailed and thoroughly false narrative about this issue. It will say that Warren has been proven to have no Native ancestry. It will say that she used a fraudulent claim of such ancestry to get jobs, exploiting a system set up to give unearned benefits to minorities and discriminate against white people. It will say that she's a symbol of everything we should hate about the America that existed before Donald Trump came along and began setting things right. The attack will function as a vehicle for white resentment about affirmative action in particular and race in general, ope[...]

West Virginia Teachers and the Working-Class Revolt

Fri, 09 Mar 2018 21:21:55 +0000

(Craig Hudson/Charleston Gazette-Mail via AP) Teachers and school personnel gather outside the capitol building on the fourth day of the statewide strike, on February 27, 2018. Sometimes, working people push back. Faced with jobs that don’t pay enough to make ends meet, health-care costs that break the budget, and public services exposed to countless rounds of cutbacks despite a growing economy, working people will push back. And, like the teachers across the state of West Virginia who walked out on strike for nine days and won meaningful raises and a freeze in health costs for all the state’s public employees, working people who push back sometimes win. The simple message that it’s possible to fight back and win is powerful. It is surely resonating with teachers in Oklahoma, who, like their counterparts in West Virginia, are among the most underpaid in the nation: They are preparing for their own statewide rebellion against the funding cuts that have harmed the education of Oklahoma’s children and left their teachers struggling to get by. But the resonance should be wider: Data from the Center on Budget and Policy Priorities show that most states across the country cut school funding after the Great Recession, and the majority never fully restored their support. In 2015, 29 states were still supplying less overall funding per student than they provided in 2008. In many of the states with the largest cutbacks in school funding, policymakers steeply reduced taxes for corporations and the wealthiest residents even as they drained education budgets, undermining schoolchildren and the teachers and staff who work every day to support them. School funding cuts are a key example of how corporate lobbyists and other wealthy interests have manipulated the rules of our economy to consolidate their own power and wealth at the expense of not just our schools, but our broader communities, and the quality of jobs for public and private-sector workers alike. The ideology of corporate windfalls and public austerity is everywhere in our national politics, from the massive corporate tax cuts passed by Congress to the Trump administration’s budget proposals slashing the basic services Americans depend on. In fact, the same day a resolution to the West Virginia strike was announced, policymakers from both parties in the U.S. Senate voted to advance debate on a bill to weaken bank regulations, approving a law that the Congressional Budget Office projects will increase the likelihood that the public will again be called on to bail out large banks that maximize their profits at the public’s risk. Funds are always available for another bank bailout, even as austerity insists that there is never enough money for the good schools, well-maintained streets, and quality health care our communities need—or for the solid, middle-class, union jobs that provision of these vital services has often brought to women and people of color for the first time. And so part of the pushback includes demanding more from our public officials, demanding that they embrace an agenda that substantially addresses the economic challenges faced by working people and the families they support. We must fight back against a culture war that scapegoats immigrants and people of color and goads Americans to resent other working people, and train our eyes on the corporate greed that undermines prosperity for all our communities. In West Virginia, the fight continues, as state legislators insist that raises for public workers can only come at the expense of health care for the poor and other public services—even as teachers continue to call for fossil fuel companies to pay their fair share of taxes to a state that has long contributed to their wealth. In an atmosphere of relentless cutbacks to public services, with our freedom to join together in unions under a[...]

National Security Agencies Have Spoken: Private Equity Ownership Imperils America

Thu, 08 Mar 2018 22:25:27 +0000

(AP Photo/Markus Schreiber) Blackstone Group CEO Stephen Schwarzman attends a panel during the World Economic Forum in Davos, Switzerland, on January 23, 2018. By the normal standards of U.S. national security, the government’s ruling on Tuesday to delay and potentially derail the acquisition of high-tech company Qualcomm by the Singaporean company Broadcom was startlingly smart and gobsmackingly wonderful. It was smart because it extended its definition of U.S. security interests to maintaining our advantage in the development of the most advanced forms of technology, in this case, the 5G communications systems that will be critical to both driverless cars and network security in coming decades. The government’s Committee on Foreign Investment in the United States (CFIUS for short) wrote that it feared that if Qualcomm, the nation’s leading developer of 5G technology, were purchased by Broadcom, its research would suffer and a Chinese high-tech company, Huawei, would likely surge past it to become the global leader in security technology. In the past, CFIUS has blocked several Huawei attempts to purchase U.S. tech companies because they would have involved the transfer of security-related technology to a company that CFIUS has demonstrated has ties to the Chinese military. CFIUS—an interagency committee headed by the Treasury Department, but also consisting of more than a dozen departments and agencies, ranging from Defense to Commerce—is in the business of ruling on potential foreign purchases of U.S. companies that have national security implications. Tuesday’s ruling was groundbreaking in that the issue wasn’t whether Singapore’s Broadcom itself posed a security risk by favoring the Chinese—nothing in the CFIUS letter even hinted at that—but rather, that the purchase might simply reduce Qualcomm’s capacity to conduct high-end research, thereby enabling Huawei and the Chinese to develop advanced technology before we do, which could give them a military advantage. But why would Qualcomm’s purchase by Broadcom diminish Qualcomm’s commitment to research? This is the gobsmacking part of the CFIUS letter. Because, in the words of the letter, “Broadcom’s statements indicate that it is looking to take a ‘private-equity’-style direction if it acquires Qualcomm, which means reducing long-term investment, such as R&D, and focusing on short-term profitability.” Let that sink in for a moment. The staffers of CFIUS—probably the most business- and security-savvy civil servants in the government, headed by those at Treasury—are saying that the private-equity control of companies, which is a dominant feature of current American capitalism, reduces investment and results in profit extraction. CFIUS does not go on to say that the purchase of U.S. companies not only by foreign companies but by U.S. private equity firms, too, also leads to reduced investments and the kind of profit extraction that has enriched the 1 percent at the expense of other Americans; that’s not CFIUS’s mission. But having baldly stated that private equity leads to profit extraction, that’s the inescapable conclusion that any reader of CFIUS’s letter must reach. The CFIUS letter goes on to specify the way in which Broadcom follows the private equity model of purchasing companies by taking on debt, and paying off that debt by reducing expenditures and funneling revenue into profits. “Broadcom has lined up $106 billion of debt financing to support the Qualcomm acquisition,” CFIUS writes, “which would be the largest corporate acquisition loan on record. This debt load could increase pressure for short-term profitability, potentially to the detriment of longer-term investments. The volume of recent acquisitions by Broadcom has increased the company’s profits and market capitaliza[...]

The Move to Politicize Churches Is Back, and Conservatives Should Be Outraged

Thu, 08 Mar 2018 14:24:13 +0000

Kristoffer Tripplaar/Sipa via AP Images The headquarters of the Internal Revenue Service in Washington democracy_rules.jpg There are a lot of reasons why President Trump’s plan to let churches wade directly into partisan politics, which Congress may now approve as part of a must-pass spending bill, is a colossally bad idea. Reversing the so-called Johnson Amendment, which bars churches and other charities from direct campaigning, would drag churches into the profane world of electioneering. It would damage public trust in charities, which could dry up their contributions. It would blow a hole in the election laws, by ushering in “pop-up” churches that come and go with the political cycles, boosting undisclosed expenditures, and letting donors write off purely political contributions. But the best argument against politicizing charities, ironically enough, may come from conservatives themselves—in an unrelated Supreme Court challenge known as Janus v. American Federation of State, County and Municipal Employees. In that challenge, which the High Court heard last month, an Illinois social worker named Mark Janus argues that the agency fees he pays his labor union are unconstitutional because they force him to subsidize positions with which he disagrees. As William L. Messenger, the lawyer representing Janus, told the Supreme Court, the First Amendment bars “compulsory fee for speech to influence governmental policies.” This argument doesn’t wash in the Janus case, because unions are already barred from spending dues money on campaigns or political contributions. The Supreme Court acknowledged as much when it turned back a similar challenge in its landmark 1977 case, Abood v. Detroit Board of Education. Today’s right-leaning Court may side with Janus regardless, if the anti-union hostility on display during recent oral arguments is any indication. But the “compulsory speech” argument may come back to bite conservatives, particularly if Congress repeals or weakens the Johnson Amendment. That’s because political spending by tax-exempt groups, which by one estimate totaled $181 million in the 2016 election, is indirectly underwritten by every taxpayer in the nation. This is true whether the big-spending group is backed by the Koch brothers or by George Soros. Politically active nonprofit groups enjoy substantial tax benefits, and are exempt from disclosing their donors—whether taxpayers agree with their political messages or not. As the Rehnquist Court concluded in its 1983 case Regan v. Taxation With Representation, both tax exemption and tax deductibility amount to a form of public subsidy. A tax exemption “has much the same effect as cash grant” equal to what the charity would have paid in taxes, the Court found, and deductible contributions are likewise “similar to cash grants” amounting to a portion of the charitable donation. The Court was even more explicit in its definitive 2000 ruling upholding the ban on political activity by churches, Branch Ministries, Inc. v. Rossotti: “The government has a compelling interest in maintaining the integrity of the tax system and in not subsidizing partisan political activity, and Section 501(c)(3) is the least restrictive means of accomplishing that purpose.” Churches have a choice between engaging in partisan political activity or enjoying the benefits of tax exemption, the Court ruled in Rossotti, but “that choice is unconnected to plaintiffs’ ability to freely exercise their religion.” That finding directly contradicts President Trump’s claim that the Johnson Amendment, named for a ban on charitable politicking authored by then-Senator Lyndon Johnson in 1954, is squelching religious free speech. Trump pledged soon after taking office at last year’[...]