We Knew Ward Connerly was a Liar; He is also a Thief

Affirmative-Action Foe Is Facing Allegations of Financial Misdeeds

By CHARLIE SAVAGE

Published: January 17, 2012

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WASHINGTON — Ward Connerly, the black businessman who has been the face of the movement to end affirmative action for nearly two decades, is facing accusations from a prominent former ally that he has mismanaged — and exploited for his own benefit — donations to that cause made by fellow conservatives.

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Ward Connerly

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Jennifer Gratz

Moreover, a group Mr. Connerly founded to advance government policies that are race and gender neutral, the Sacramento-basedAmerican Civil Rights Institute, is under investigation by the Internal Revenue Service and by the attorney general of California, according to documents and interviews.

Mr. Connerly has faced accusations of profiteering before, as supporters of affirmative action highlighted his salary in an effort to discredit his cause. But this time, the allegations are more detailed and come from another significant movement figure: Jennifer Gratz, the named plaintiff in a landmark 2003 Supreme Court case that struck down a race-based admissions policy at the University of Michigan.

After she won that case, Mr. Connerly hired Ms. Gratz to conduct research and run campaigns supporting anti-affirmative action ballot initiatives. She resigned last September and, through her lawyer, sent the group’s board a five-page letter, a copy of which was obtained by The New York Times.

“For years, Ms. Gratz was aware of the allegations that Mr. Connerly received excessive compensation,” it said. “She presumed that the issue was politically motivated and raised solely by opponents of the organization’s mission. It has come to her attention, however, that there may be some merit to the allegations of financial impropriety.”

Interviewed by phone and e-mail, Mr. Connerly, 72, acknowledged that his group had had financial difficulties, but said its board had not responded to the letter because “90 percent” of it was false. He portrayed Ms. Gratz as a “disgruntled former employee” trying to “besmirch me personally” because she wanted to replace him.

The letter was written by Ms. Gratz’s lawyer, Robert N. Driscoll, a former deputy assistant attorney general for civil rights in the administration of George W. Bush. In a statement, through him, she said: “I thought it was important to make sure all board members were aware of what was going on even if doing so was unfortunate, sad and uncomfortable and even though it meant that I had to resign from a position within a cause that I will always hold near and dear.”

The dispute is alarming allies.

“I’m sorry to hear this because I’m a great admirer of both of them,” said Roger Clegg, the president of the Center for Equal Opportunity, which also opposes affirmative action. “She is a courageous, smart person — and Ward is also a courageous, smart person.”

A businessman and a former University of California regent, Mr. Connerly rose to fame in 1996 as the backer of a successful ballot initiative barring public institutions in California from taking race or gender into account. He later founded the institute and a related advocacy group and continued to call for “colorblind government” in matters like contracting and college admissions.

Ms. Gratz’s letter alleges a series of financial irregularities, starting with Mr. Connerly’s pay.

Late last summer, the institute belatedly filed disclosure forms for tax years ending in June2008, 2009, and 2010. (The I.R.S. that summer had revoked the tax-exempt status of its related advocacy group for failing to file such forms.) They showed that his annual pay was between $1.2 million and $1.5 million each year — more than half its revenue.

Because charitable donations are tax deductible, according to I.R.S. rules no employee may get excessive compensation. Two other nonprofit groups opposing affirmative action, the Center for Equal Opportunity and the Center for Individual Rights, pay their leaders about $144,000 and $250,000, respectively.

Mr. Connerly said that “every penny which I receive is directly related to our mission,” and that he used some of his salary to pay others for research and legal work. He also said the group had reduced his pay to $850,000.

One reason Mr. Connerly has been a particularly effective advocate is that he is black. Mr. Clegg said there were “few people who can do or would do what he does,” adding that it is hard to set a salary on a job that requires enduring racially charged name-calling from fellow blacks.

A major financial supporter is the Lynde and Harry Bradley Foundation. Its president, Michael W. Grebe, said he was “very comfortable” that its donations to Mr. Connerly’s group were “being spent for public education programs.”

“He’s very effective,” Mr. Grebe said.

Ms. Gratz’s letter contends that the group has been “in financial crisis since March 2010” in part because of Mr. Connerly’s salary and legal fees related to the tax investigations, and has “ceased almost entirely” doing projects furthering its mission since June 2011.

Her letter also says the group has had trouble making payroll and “knowingly” under-reported what it paid employees on payroll tax forms — “irregularities” that “partly result from disruptions in revenue” but that “also appear to be designed to facilitate Mr. Connerly’s high salary.”

Mr. Connerly denied such allegations as “speculation and conjecture,” saying Ms. Gratz was not privy to administrative details. He also said educational activities by him and his group were “instrumental” in passing an anti-affirmative action initiative in Arizona in November 2010, and in laying the groundwork for a vote on a similar measure in Oklahoma set for fall 2012.

Ms. Gratz’s letter said five of the group’s eight employees “are family members” or have “personal or nonprofessional relationships with Mr. Connerly,” and raised questions about its “contracts for services and leases.”

For example, the letter said, the group contracted with a former longtime employee of Mr. Connerly’s profit-making firm to create a report on Oklahoma, for up to 120 hours at $60 an hour; it “consisted mainly of printouts from Wikipedia.”

While the letter did not explain its reference to “leases,” the group’s recent tax filings show that its rent tripled, to just under $70,000, after it moved to a different building about four years ago. Records show a group employee purchased the building in February 2008 for about $444,000.

Mr. Connerly said hiring people he knew was appropriate, given his group’s “controversial” mission. He also said he had instructed the employee to find new offices because they needed more room, and he approved the arrangement she had made.

Despite his salary, Mr. Connerly acknowledged that he had had financial difficulties; public records show that in 2010 and 2011, several hundred thousand dollars in liens for unpaid taxes were leveled against him. He said he was working on paying what he owed. In addition, a disclosure form filed with the IRS says the institute discovered last year that Mr. Connerly had submitted “unsubstantiated” business expenses from his credit card and cellphone bills. He had paid back $10,000 as of September, but still owed about $24,000.

Ms. Gratz was once Mr. Connerly’s defender. In 2008, when anti-affirmative action initiatives were on the ballot in Colorado and Nebraska, a liberal group ran ads portraying him as supporting such measures so he could pocket “nonprofit slush funds.”

Ms. Gratz made a video denouncing the ads as character assassination. But, her letter said, she subsequently realized that Mr. Connerly’s group had “not been adequate stewards of the resources the donors entrusted to the organization,” adding that she “will cooperate with any government investigation.”

Kitty Bennett contributed research.

A version of this article appeared in print on January 18, 2012, on page A10 of the New York edition with the headline: Affirmative-Action Foe Is Facing Allegations Of Financial Misdeeds.

37 Giant Corporations Paid 0 (ZERO) in Taxes Last Year -- Who Are the Cheats?

37 Giant Corporations Paid 0 in Taxes Last Year -- Who Are the Cheats?

By Andrew Leonard, Salon
Posted on November 3, 2011, Printed on November 4, 2011
http://www.alternet.org/story/152958/37_giant_corporations_paid_0_in_taxes_last_year_--_who_are_the_cheats

In 2010, Verizon reported an annual profit of nearly $12 billion. The statutory federal corporate income tax rate is 35 percent, so theoretically, Verizon should have owed the IRS around $4.2 billlion. Instead, according to figures compiled by the Center for Tax Justice, the company actually boasted a negative tax liability of $703 million. Verizon ended up making even more money after it calculated its taxes.

Verizon is hardly alone, and isn’t even close to being the worst offender. Perhaps most famously, General Electric raked in $10.5 billion in profit in 2010, yet ended up reporting $4.7 billion worth of negative taxes. The worst offender in 2010, as measured by its overall negative tax rate, was Pepco, the electricity utility that serves Washington, D.C. Pepco reported profits of $882 million in 2010, and negative taxes of $508 million — a negative tax rate of 57.6 percent.

Altogether, according to “Corporate Taxpayers & Corporate Tax Dodgers 2008-10,” a blockbuster new report put together by the Citizens for Tax Justice and the Institute on Taxation and Economic Policy that will have you reaching for your hypertension medicine before you finish reading the third page, 37 of the United States’ biggest corporations paid zero taxes in 2010. The list is a blue-chip roll-call.

As the authors acidly note, “Most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.”

The “high taxation” lie

Reading through this report, you will find yourself seized by an irresistible desire to hurl yourself headlong into the nearest OccupyYourLocalCity protest. In an era of crushing government deficits and mass unemployment, corporate America is not only skating blissfully free of its civic responsibilities, but continues to complain that it is paying too much in taxes. Even worse: Congressional Republicans and many Democrats agree! Listening to our politicians talk, you would imagine that corporate America’s neck is permanently under the tax man’s steel-tipped boot. When, in fact, the exact opposite is the truth.

The list of companies that paid zero taxes is only the beginning of the travesties documented by the report. The authors looked at the tax filings from 2008-2010 of 280 of the nation’s biggest, most successful corporations. These companies reported $1.4 trillion worth of profit during a period when most Americans were struggling to stay afloat. The authors discovered that the average effective tax rate — what the companies really paid after government subsidies, tax breaks and various tax dodges were taken into account — was only 18.5 percent, less than half the statutory rate. Fully a quarter of the 280 companies paid under 10 percent.

Remember that fact, the next time someone tries to tell you that American corporations pay the highest income taxes in the free world. The only number that counts is the “effective tax rate.” One of the interesting tidbits provided by the authors is that in many cases, the tax rate on foreign income for many of these companies is actually higher than the effective U.S. rate.

The most distressing part of the tale is the big picture: The overall trend line is pointed in exactly the wrong direction. If you break out just the years 2009-2010, the effective tax rate was 17.3 percent. “In 2008, 22 companies paid no federal income tax, and got $3.3 billion in tax rebates. In 2010, 37 companies paid no income tax, and got $7.8 billion in rebates.” When measured as a percentage of total GDP, over the last three fiscal years, “total corporate income tax payments fell to only 1.16 percent of the GDP … a new sustained record low since World War II.

Corporate taxes paid for more than a quarter of federal outlays in the 1950s and a fifth in the 1960s. They began to decline during the Nixon administration, yet even by the second half of the 1990s, corporate taxes still covered 11 percent of the cost of federal programs. But in fiscal 2010, corporate taxes paid for a mere 6 percent of the federal government’s expenses.

How have these companies managed to cut their tax liabilities so far? The answer includes a mixture of targeted tax breaks that impact specific industries or companies, accounting games that corporations play with stock options, and sweeping adjustments to tax law such as changes in the rules in how companies can write off the value of depreciating equipment. The accounting rules for so-called accelerated depreciation are now so accommodating that companies can write off 75 percent of the cost of new equipment immediately.

A look at the list of the 10 corporations receiving the biggest tax-subsidy breaks from the U.S. government will defeat the ameliorating effects of anymedication: Wells Fargo, AT&T, Verizon Communications, General Electric, International Business Machines, Exxon Mobil, Boeing, PNC Financial Services Group, Goldman Sachs Group, and Procter & Gamble. “56 percent of tax subsidies,” write the authors, “went to four industries: financial, utilities, telecom, oil/gas/pipeline.”

The companies that pay

However, not all companies are tax dodgers. Of the 280 companies analyzed by the authors, about 25 percent of the total paid close to the statutory rate, a little over 30 percent. But there’s no rhyme or reason to who pays or who doesn’t.

DuPont and Monsanto both produce chemicals. But over the 2008-10 period, Monsanto paid 22 percent of its profits in U.S. corporate income taxes, while DuPont actually paid a negative tax rate of –3.4 percent. Department store chain Macy’s paid a three-year rate of 12.1 percent, while competing chain Nordstrom’s paid 37.1 percent. In computer technology, Hewlett-Packard paid 3.7 of its three-year U.S. profits in federal income taxes, while Texas Instruments paid 33.5 percent. FedEx paid 0.9 percent over three years, while its competitor United Parcel Service paid 24.1 percent.

The authors conclude on a wistful note, with a list of what Washington could do to bring sense and reason to corporate taxation, while providing the government with desperately needed revenue. But as the authors themselves readily acknowledge, their recommendations exist in an alternate universe from the one that we actually happen to live in.

Unfortunately, corporate tax legislation now being promoted by many in Congress seems stuck on the idea that as a group, corporations are now either paying the perfect amount in federal income taxes or are paying too much. Many members of the tax writing committees in Congress seem intent on making changes that would actually make it easier (and more lucrative) for companies to shift taxable profits, and potentially jobs, overseas. Meanwhile, GOP candidates for president are all promoting huge cuts in the corporate tax or, in several cases, even elimination of the corporate income tax entirely.

And that, ultimately, is the most enraging fact about the new report from the Citizens for Tax Justice and the Institute on Taxation and Economic Policy. It won’t make a darn bit of difference.

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

House panel hearing explores U.S. government contractors’ exploitation of workers overseas

By Olivia LaRosa
Those government entitlements corporations receive, called contracts by some, result in the enslavement of human beings and have for decades.  Yea verily even for centuries.

Congress is taking note.  I bet they will order a "study" then develop yet another toothless enforcement mechanism that will co-opt the the opposition of the left once more. Seems like the more often you tell people that you are going to do something about the say, the red-eared turtle problem, the more likely they are to forget about whatever was troubling them.

One recent stomach-turning example by a third-striker, DynCorp, here:

Wikileaks Reveals U.S. Tax Dollars Fund Child Sex Slavery in Afghanistan

I have often asked this question of my right-wing acquaintances:

"Why aren't your organizations involved in child-abuse prevention?"  Invariably, my answer is a blank stare from the questioned. 

My intuition, experience, and education tells me that the institutional instinct to shelter, or fail to report abusers, is related to the maintenance of patriarchy.  Today, the papers ran a feature story about a man who had been victimizing Boy Scouts since 1970.  He was occasionally impeded in his rampage, but never for long. Everyone knows about the system-wide institutional cover-up of abuse in the Catholic Church, and many other organizations, too numerous to list here.

The Left's Interest in this Issue

At least 1/3 of women have been sexually abused at some point in their lives.  Child abuse frequently continues for years, while the child feels increasingly alienated, abandoned, and fearful of the world. Most sexual abusers are men, 95% to women's 5%.  The high percentage of men is accounted for not because 95% of men are abusers, but because the abuser is a repeat offender of the worst sort.  I have met thousands of men in the course of my 46-year course of parenthood, 15 years of work in a consumer branch bank, and seemingly endless quest for a BA.

Therefore I believe that most of the thousands of men I met were civilized, kind, and thoughtful.

The needless damage abusers cause our children and their families costs our society in a geometric progression from the relationship between the abused and the abuser, those who choose to face the horror, and those who choose to run and hide from the monstrous act. All too often, serial child abusers walk free every single day of their lives, because too many of us choose to run and hide when confronted with the evidence that their brother/son/uncle is a child molester.

Please allow me to share with you my first sexual victimization.  Why?  Because I emerged only slightly damaged by the experience. It occurred when I was five years old.  The neighbor boy around the corner, 15 years old, talked me into going into his garage.  After he released me and I walked back home, my grandmother glanced at me, then peered at me in alarm, and said, "Baby, what's wrong?" I told her what had happened to me. It was that way between us; I always told my grandma everything.

She said, "You don't worry about a thing.  You did not do anything wrong. You just get comfy and wait here for me.  I am going next door."

Victims seldom feel the relief of closure of their violation.  Reasons for this include:

1. denial of violation or knowledge thereof by child's primary caregiver (say, father is violator and mother is enabler here).

2. violator is a stranger; or unsought or unapprehended

3. violator is the breadwinner of the family and thus deemed immune from punishment for his heinous acts.

4. violator is a family member; reports to parents are not believed

5. violator threatens to harm or kill family members who try to intervene in the abuse

6. violator is a sibling

Closure for most of us would be to tell the violator how his violation of our personal space and physical body hurt us. Children are trusting by nature. Nothing harms a child more than violations of that trust.

Closure would also include the ability to be secure in the knowledge that the violator will be unable to commit further crimes. We are kids; we don't know how you adults punish people.  We figure that they have outgrown spankings, and imagination fails to think of anything more horrible than a spanking.

The shock of the violation often frightens victims into cages bounded by fear; friendship and love often seem far away. It is amazing that we master the ability to regain a healthy relationship with other humans.

Furthermore, parents of abused children feel hollowed out by the knowledge that the child they had protected and warned (about people who tried to touch you or give you food or get in their car) was so powerfully coerced by her abuser that she could not tell. These parents would have given anything to be able to share and ease the terrible burden borne by their child.




Counseling and psychotherapy will do wonders for all of the victims of sexual abuse.

Alas, too often they end up at the bottom of the heap because their emotional damage and the bodily memories of their suffering burden them with less effective functioning capabilities.

The WaPo article links follow:

Print Style

http://www.washingtonpost.com/politics/house-panel-hearing-explores-us-government-contractors-exploitation-of-workers-overseas/2011/11/02/gIQAImMggM_print.html

Web Page

http://www.washingtonpost.com/politics/house-panel-hearing-explores-us-government-contractors-exploitation-of-workers-overseas/2011/11/02/gIQAImMggM_story.html?wpisrc=nl_fedinsider

The Left's Interest in this Issue

At least 1/3 of women have been sexually abused at some point in their lives.  This abuse frequently continues for years, while the child feels increasingly alienated, abandoned, and fearful of the world. Most sexual abusers are men, 95% to women's 5%.  The high percentage is accounted for because the abuser is a repeat offender of the worst sort.  The needless damage to our children by abusers costs us all in the long run.  Few victims of abuse emerge with the ability to regain a healthy relationship with other humans.  Far too often they end up at the bottom of the heap because their emotional damage and the bodily memories of their suffering burden them with less effective functioning capabilities.

Tangerine Juice Exposed!

By Olivia LaRosa

I know where to get good tangerine juice. Honest. I was rushed one day, and bought what I thought was tangerine juice at Safeway.

Tangerine juice is as tasty as orange juice, but less acidic for those of us with delicate tummies. It is 100% juice.

But what I got at Safeway was definitely not tangerine juice! And who knows what 100% juice really means in a day when McDonald's claims to have an all-beef patty (tm) because it trademarked the name.

My best friend read the label before I could return with nice clean ruby-cut juice glasses. He said, "I don't think that this is really tangerine juice." I sagged in dismay. I poured an inch into my glass and tasted it. I could barely swallow it. And this, from a woman who used to claim that she had a cast-iron stomach, for reasons beyond her ken.

The alleged beverage is named Dole Sensation Natural Tangerine, with a 100% Natural leafy icon in the lower left corner. I laughed. In leetle tiny letters in the lower right, I now see that it is: "Juice blend from concentrate with other natural flavors."

 They can't fool me. I have done my homework. I have eaten lots of fast food, but not on purpose.* I read Fast Food Nation and Supersize Me. So-called natural flavors can be a synthetic chemical compound just like artificial flavors. After I get done blowing off steam here, I am writing to Dole. The carton sits right next to my machine.

 ###

*Except for In-and-Out Burger, which is the only fast food chain with consistently high marks from Fast Food Nation. I eat there because the burgers are delicious, not because of any rating system. Good hamburgers and bacon keep me from becoming a total vegetarian. *snicker*

Congrats to the Gang of Six, the Powerful, the Wealthy, and Multinational Corporations

http://www.commondreams.org/view/2011/07/21


Published on Thursday, July 21, 2011 by CommonDreams.org

Congrats to the Gang of Six, the Powerful, the Wealthy, and Multinational Corporations

by Bernie Sanders

If there was ever a time in the modern history of America that the American people should become engaged in what's going on here in Washington, now is that time. Decisions are being made that will impact not only our generation but the lives of our children and our grandchildren for decades to come, and I fear very much that the decisions being contemplated are not good decisions, are not fair decisions.

There is increased understanding that that defaulting for the first time in our history on our debts would be a disaster for the American economy and for the world's economy. We should not do that.

There also is increased discussion about long-term deficit reduction and how we address the crisis which we face today of a record-breaking deficit of $1.4 trillion and a $14 trillion-plus national debt.

One of the long-term deficit reduction plans came from the so-called Gang of Six. We do not know all of the details of that proposal. In fact, we never will know because a lot of the decisions are booted to committees to work out the details.

It is fair to say, however, that Senators Coburn, Senator Crapo and Chambliss deserve congratulations. Clearly, they have won this debate in a very significant way. My guess is that they will probably get 80 percent or 90 percent of what they wanted. In this town, that is quite an achievement, but they have stood firm in their desire to represent the wealthy and the powerful and multinational corporations. They have threatened. They have been smart. They have been determined. And at the end of the day, they will get almost all of what they want. That is their victory, and I congratulate them.

Unfortunately, their victory will be a disaster for working families in this country, for the elderly, for the sick, for the children and for low-income people.

Based on the limited information that we have, I think it is important to highlight some of what is in this so-called Gang of Six proposal that the corporate media, among others, are enthralled about.

Some may remember that for a number of years, leading Democrats said that we will do everything that we can to protect Social Security, that Social Security has been an extraordinary success in our country, that for 75 years, with such volatility in the economy, Social Security has paid out every nickel owed to every eligible American. I heard Democrats say that Social Security has nothing to do with the deficit. That is right because Social Security is funded by the payroll tax, not by the U.S. Treasury. Social Security has a $2.6 trillion surplus today. It can pay out every benefit owed to every eligible American for the next 25 years. It is an enormously popular program. Poll after poll from the American people says doesn't cut Social Security. Two and a half years ago when Barack Obama, then a senator from Illinois, ran for president of the United States, he made it very clear if you voted for him there would be no cuts in Social Security.

What Senators Coburn, Crapo and Chambliss have managed to do in the Gang of Six is reach an agreement where there will be major cuts in Social Security. Don't let anybody kid you about this being some minor thing. It is not. What we are talking about is that Social Security cuts would go into effect virtually immediately. Ten years from now, the typical 75-year-old person will see their Social Security benefits cut by $560 a year. The average 85-year-old will see a cut of $1,000 a year. Now, for some people here in Washington, maybe the big lobbyists who make hundreds of thousands a year, $560 a year or $1,000 a year may not seem like a lot of money, but if you are a senior trying to get by on $14,000, $15,000, $18,000 a year and you're 85 years old, the end of your life, you're totally vulnerable, you're sick -- a $1,000 per year cut in what you otherwise would have received is a major, major blow.

So I congratulate Senator Coburn, Senator Crapo, Senator Chambliss for doing what president Obama said would not happen under his watch, what the Democrats have said would not happen under their watch.

But it's not just Social Security. We have 50 million Americans today who have no health insurance at all. Under the Gang of Six proposals, there will be cuts in Medicare over a 10-year period of almost $300 billion. There will be massive cuts in Medicaid and other health care programs. There will be caps on spending, which mean that there will be major cuts in education. If you are a working-class family, hoping that you're going to be able to send your kid to college and thinking that you will be eligible for a Pell grant, think twice about that. Pell grants may not be there. If you're a senior who relies on a nutrition program, that nutrition program may not be there. If you think it's a good idea that we enforce clean air and clean water provisions so that our kids can be healthy, those provisions may not be there because there will be major cuts in environmental protection.

Some people think that's not so good, but at least our Republican friends are saying we need revenue and we're going to get $1 trillion in revenue. But wait a minute,. If you read the proposal, there are very, very clear provisions making sure that we are going to make massive cuts in programs for working families, for the elderly, for the children. Those cuts are written in black and white. What about the revenue? Well, it's kind of vague. The projection is that we would rise over a 10-year period $100 billion in revenue. Where is that going to come? Is it necessarily going to come from the wealthiest people in this economy? Is it going to come from large corporations who are enjoying huge tax breaks? That is not clear at all. I want middle-class families to understand that when we talk about increased revenues, do you know where that comes from? It may come from cutbacks in the home mortgage interest deduction program, which is so very important to millions and millions of families. It may mean that if you have a health care program today, that health care program may be taxed. That's a way to raise revenue. It may be that there will be increased taxes on your retirement programs, your I.R.A.'s, your 401(k)'s. But we don't have the details for that. All we have is some kind of vague promise that we're going to raise $1 trillion over the next 10 years, no enforcement mechanism and no clarity as to where that revenue will come from.

That is why it is so terribly important that the American people become engaged in this debate which will have a huge impact on them, on their parents and on their children. The American people must fight for a fair deal. At a time when the wealthiest people in this country are doing phenomenally well and their effective tax rate is the lowest on record, at a time when the top 400 individuals in this country own more wealth than 150 million Americans, at a time when corporate profits are soaring and in many instances corporations, these same corporations pay nothing in taxes, at a time when we have tripled military spending since 1997, there are fair ways to move toward deficit reduction which do not slash programs that working families and children and the elderly desperately depend upon.

This senator is going to fight back. I was not elected to the United States Senate to make devastating cuts in Social Security, in Medicare, in Medicaid, in children's programs while lowering tax rates for the wealthiest people in this country.

Bernie Sanders (I-Vt.) was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history. Elected Mayor of Burlington, Vt., by 10 votes in 1981, he served four terms. Before his 1990 election as Vermont's at-large member in Congress, Sanders lectured at the John F. Kennedy School of Government at Harvard and at Hamilton College in upstate New York. Read more at his website.

more Bernie Sanders

More Claptrap about the Mortgage Crisis

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/22/AR2010122205557_Comments.html


The article says: "But this argument seems especially inopportune now, since whatever happened in the past, there is broad agreement about what should happen in the future: The old "government-sponsored enterprise" model is a proven failure. Fannie and Freddie should be gradually dismantled and replaced with a new system of mortgage finance that does not permit ostensibly private companies to profit from an implicit federal government guarantee. To be sure, there is no consensus between, or within, the two parties as to how much - or how little - government involvement to retain, and how precisely to structure a federal role. But all serious proposals emphasize a greater role for private capital than it currently has."

DeborahPhoenix wrote:
A brief history lesson will be of help here, and it will NOT make the anyone happy who thinks that a. the free market would have corrected this or b. that the mission of Fannie Mae and Freddie Mac was inherently flawed. Both agencies were directly controlled by the government until the mid-1970's. Then, the process of their privatization began. They were sold off to help pay for the debt accumulated during the Vietnam War. Had they been left alone, we probably wouldn't have this situation now. Since privatization is primarily a Republican "solution" I am more inclined to fix blame on that side. It is clear that both parties were whooping it up during the bubble and were too afraid to look at the dark underbelly. Because I am a former mortgage loan officer, I soon realized that the mortgage companies had abandoned tried and true underwriting principles. I could see it coming, and I am a nobody. Why couldn't all this high-priced help stop it?

The killing fields of MNCs | The Asian Age

The killing fields of MNCsThe killing fields of MNCs | The Asian Age

The Bhopal gas tragedy was the worst industrial disaster in human history. Twenty-five thousand people died, 500,000 were injured, and the injustice done to the victims of Bhopal over the past 25 years will go down as the worst case of jurisprudence ever.
The gas leak in Bhopal in December 1984 was from the Union Carbide pesticide plant which manufactured “carabaryl” (trade name “sevin”) — a pesticide used mostly in cotton plants. It was, in fact, because of the Bhopal gas tragedy and the tragedy of extremist violence in Punjab that I woke up to the fact that agriculture had become a war zone. Pesticides are war chemicals that kill — every year 220,000 people are killed by pesticides worldwide.
After research I realised that we do not need toxic pesticides that kill humans and other species which maintain the web of life. Pesticides do not control pests, they create pests by killing beneficial species. We have safer, non-violent alternatives such as neem. That is why at the time of the Bhopal disaster I started the campaign “No more Bhopals, plant a neem”. The neem campaign led to challenging the biopiracy of neem in 1994 when I found that a US multinational, W.R. Grace, had patented neem for use as pesticide and fungicide and was setting up a neem oil extraction plant in Tumkur, Karnataka. We fought the biopiracy case for 11 years and were eventually successful in striking down the biopiracy patent.
Meanwhile, the old pesticide industry was mutating into the biotechnology and genetic engineering industry. While genetic engineering was promoted as an alternative to pesticides, Bt cotton was introduced to end pesticide use. But Bt cotton has failed to control the bollworm and has instead created major new pests, leading to an increase in pesticide use.
The high costs of genetically-modified (GM) seeds and pesticides are pushing farmers into debt, and indebted farmers are committing suicide. If one adds the 200,000 farmer suicides in India to the 25,000 killed in Bhopal, we are witnessing a massive corporate genocide — the killing of people for super profits. To maintain these super profits, lies are told about how, without pesticides and genetically-modified organisms (GMOs), there will be no food. In fact, the conclusions of International Assessment of Agricultural Science and Technology for Development, undertaken by the United Nations, shows that ecologically organic agriculture produces more food and better food at lower cost than either chemical agriculture or GMOs.
The agrochemical industry and its new avatar, the biotechnology industry, do not merely distort and manipulate knowledge, science and public policy. They also manipulate the law and the justice system. The reason justice has been denied to the victims of Bhopal is because corporations want to escape liability. Freedom from liability is, in fact, the real meaning of “free trade”. The tragedy of Bhopal is dual. Interestingly, the Bhopal disaster happened precisely when corporations were seeking deregulation and freedom from liability through the instruments of “free trade”, “trade liberalisation” and “globalisation”, both through bilateral pressure and through the Uruguay Round of General Agreement on Tariffs and Trade (GATT) which led to the creation of the World Trade Organisation.
Injustice for Bhopal has been used to tell corporations that they can get away with murder. This is what senior politicians communicated to Dow Chemical. This is what the US-India Commission for Environmental Cooperation forum stated on June 11, 2010, in the context of the call from across India for justice for Bhopal victims. As one newspaper commented, Bhopal is being seen as a “road block and impediment to trade… the recommendations include removing road blocks to commercial trade by (India), and adoption of a nuclear liability regime”.
Denial of justice to Bhopal has been the basis of all toxic investments since Bhopal, be it Bt cotton, DuPont’s nylon plant or the Civil Nuclear Liability Bill.
Just as Bhopal victims were paid a mere Rs 12,000 (approximately $250) each, the proposed Nuclear Liability Bill also seeks to put a ceiling on liability of a mere $100 million on private operations of a nuclear power plant in case of a nuclear accident. Once again, people can be killed but corporations should not have to pay.
There has also been an intense debate in India on GMOs. An attempt was made by Monsanto/Mahyco to introduce Bt brinjal in 2009. As a result of public hearings across the country, a moratorium has been put on its commercialisation. Immediately after the moratorium a bill was introduced for a Biotechnology Regulatory Authority of India —the bill does not only leave the biotechnology industry free of liability, but it also has a clause which empowers the government to arrest and fine those of us who question the need and safety of GMOs.
From Bhopal to pesticides to GMOs to nuclear plants, there are two lessons we can draw. One is that corporations introd­u­ce hazardous technologies like pe­sticides and GMOs for profits, and profits alone. And second le­sson, related to trade, is that corporations are seeking to ex­p­a­nd markets and relocate haza­r­d­o­us and environmentally costly te­c­hnologies to countries like India.
Corporates seek to globalise production but they do not want to globalise justice and rights. The difference in the treatment of Union Carbide and Dow Chemical in the context of Bhopal, and of BP in the context of the oil spill in the Gulf of Mexico shows how an apartheid is being created. The devaluation of the life of people of the Third World and ecosystems is built into the project of globalisation. Globalisation is leading to the outsourcing of pollution — hazardous substances and technologies — to the Third World. This is at the heart of globalisation — the economies of genocide.
Lawrence Summers, who was the World Bank’s chief economist and is now chief economic adviser to the Obama government, in a memo dated December 12, 1991, to senior World Bank staff, wrote, “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the less developed countries?”
Since wages are low in the Third World, economic costs of pollution arising from increased illness and death are least in the poorest countries. According to Mr Summers, the logic “of relocation of pollutants in the lowest wage country is impeccable and we should face up to that”.
All this and Bhopal must teach us to reclaim our universal and common humanity and build an Earth Democracy in which all are equal, and corporations are not allowed to get away with crimes against people and the planet.

Dr Vandana Shiva is the executive director of the Navdanya Trust

Studies suggest MMS knew blowout preventers had 'critical' flaws

http://www.csmonitor.com/USA/2010/0617/Studies-suggest-MMS-knew-blowout-preventers-had-critical-flaws

And Big Oil-led study earlier suggested that safety procedures were overdone. Noooo, we don't need effective regulation! That's for sissies.

Just stop to think for a moment whether the privatization of the oil industry is a good thing for humanity overall. BP, ExxonMobil etal are obscenely rich. What if we had that money to support our education system and infrastructure?

~Hypatia

Government regulators have said that the failure of the Deepwater Horizon's blowout preventer April 20 was unforeseeable. But studies conducted for federal regulators in MMS or with their participation show that blowout preventers were known to have 'safety critical' vulnerabilities.


Go to the original to see illustrations and photos.

Robot submarines vainly attempted to activate the shear rams on the Deepwater Horizon's blowout preventer on April 22 to close off the flow of oil from the Macondo well. Federal regulators from MMS set the standards for blowout preventers, but several studies suggest the agency took no action to tighten safety measures even when 'critical' vulnerabilities became apparent.

US Coast Guard/AP/file

he federal agency charged with setting safety standards for offshore oil exploration failed to act on at least four warnings about vulnerabilities in subsea blowout preventers, the critical safety device that failed to shut down the Gulf oil spill when the Deepwater Horizon oil rig exploded April 20.
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In this diagram of a blowout preventer, the hydraulic rams are the horizontal, piston-like protrusions. The rams are designed to cut and seal the pipe in an emergency, shutting off the flow of oil. They failed during the Deepwater Horizon blowout.

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Each of those four design flaws – detailed in three studies conducted for the US Minerals Management Service (MMS) during the past decade – threatened the ability of blowout preventers in deep water to function in an emergency.

Yet the flaws did not result in federal safety alerts or tougher standards for blowout preventer (BOP) manufacturers, say experts familiar with the MMS response to such findings.

RELATED: Before BP oil spill, Big Oil-led study urged feds to cut safety testing

With investigators still seeking to determine the cause of the Deepwater Horizon explosion, it remains unclear whether any of these vulnerabilities played a role in the failures that led to the Gulf oil spill. But MMS’s lack of action in spite of warnings about the flaws, three of which have not been previously reported, points to a long pattern of ignoring rather than fixing known safety threats, the experts say.

“Were BOPs designed to fail and did MMS know this? Yes, some of their key people knew,” says Robert Bea, an engineer at the University of California, Berkeley and one of the expert reviewers of President Obama’s 30-day offshore oil-exploration safety review. “Did BP know?” he adds. “Yes, some of their key people knew. Did the industry know? Yes, some of their key people knew.”

So what exactly did the MMS and industry officials know about the BOPs’ vulnerabilities and when? Government and industry officials have said the Deepwater Horizon disaster was unforeseeable – that BOPs were previously regarded as a virtually infallible “last line of defense” against a catastrophic blowout in deep water.

But a deeper look into three engineering studies from 2004, 2006, and 2009 commissioned by MMS – or done with MMS participation – tells a different story. The 2009 study, for instance, identifies 62 instances of BOP failures, four of which were deemed “safety critical.” The study was a joint industry-MMS venture and included the participation of at least four senior MMS officials. Each study sounded warnings about BOP vulnerabilities that, if heeded, could have given the agency years to fix them.

Officials at West Engineering Service, the consulting company and BOP specialist that conducted all three of the studies referenced in this article, did not return e-mails or phone calls. MMS officials, along with the Department of Interior, responded to e-mailed questions but refused requests for an interview.

“We are looking at everything, from what happened on the rig that night and the equipment that was being used, to the safety, testing, and backup procedures that are in place for that equipment,” Kendra Barkoff, Interior Department press secretary, wrote in an e-mail. “It’s also clear that we need a stronger oversight and enforcement agency to police the industry.”

The four design flaws highlighted by the three studies are as follows. The first three have not been previously reported.
No. 1: deep water pressure

In the fall of 2006, West Engineering Services of Brookshire, Texas, turned over to MMS officials a study on the effects of pressure on BOPs. Among its key findings: High deep-water pressure could severely damage the critical gaskets and seals on BOPs’ hydraulic ram valves, causing them to leak and fail in an emergency.

One type of hydraulic ram valve, called a shear ram, is designed to prevent a situation like the one in the Gulf. In the event of a catastrophic failure, the shear rams are supposed to stop the flow of oil by cutting and crumpling the pipe between them. The Deepwater Horizon’s shear rams failed, though it’s not yet clear why.

Read more at the site.

Our Fix-It Faith and the Oil Spill

http://www.nytimes.com/2010/05/30/weekinreview/30rosenthal.html

Not everything we humans do is amenable to repair.

May 28, 2010
Our Fix-It Faith and the Oil Spill
By ELISABETH ROSENTHAL

“IF we’ve learned anything so far about the deepwater Gulf of Mexico, it is that it contains surprises. And that means an operator needs depth — depth in terms of resources and expertise — to create the capability to respond to the unexpected. ”

These prophetic words came from a 2005 presentation by David Eyton, who was then vice president for BP’s deepwater developments in the Gulf of Mexico. Reprinted that year in a journal of the Society of Exploration Geophysicists, the speech acknowledged that oil companies “did somewhat underestimate the full nature of the challenges we were taking on in the deep waters of the gulf.”

Still, Mr. Eyton expressed buoyant optimism that BP’s risk management expertise, as well as its new technologies, would play a “critical role” in allowing the company to triumph over nature’s daunting obstacles.

As the world now knows, it did not turn out that way.

As BP struggled last week to stanch the flow of spewing oil at the Deepwater Horizon rig, it has become clear that the pressure to dig deeper and faster from what Mr. Eyton then called a “frontier province” of oil exploration has in some ways outpaced the knowledge about how to do that safely. (And there is still the question of whether BP used all the tools and safety mechanisms available.)

Americans have long had an unswerving belief that technology will save us — it is the cavalry coming over the hill, just as we are about to lose the battle. And yet, as Americans watched scientists struggle to plug the undersea well over the past month, it became apparent that our great belief in technology was perhaps misplaced.

“Americans have a lot of faith that over the long run technology will solve everything, a sense that somehow we’re going to find a way to fix it,” said Andrew Kohut, president of the Pew Research Center for the People and the Press. He said Pew polling in 1999 — before the September 2001 terror attacks — found that 64 percent of Americans pessimistically believed that a terrorist attack on the United States probably or definitely would happen. But they were naïvely optimistic about the fruits of technology: 81 percent said there would be a cure for cancer, 76 percent said we would put men on Mars.

Our experience of technology has been largely wondrous and positive: The green revolution ameliorated the problem of world hunger (for a time at least) with better seeds and fertilizers to increase harvests. When childhood diseases were ravaging the world, vaccines came along and (nearly) eliminated them. There are medicines for the human immunodeficiency virus and AIDS. There is the iPad.

Many experts in the field of undersea oil exploration believe that technology can also resolve the risks of operating tens of thousands of feet under the seabed, despite BP’s current problems.

“We’re pushing the envelope, but I personally believe that the technology, in terms of equipment and processes, will be able to keep up with what we’re doing — though this experience may slow things down,” said Stefan Mrozewski, a senior staff associate at the Lamont-Doherty Earth Observatory of Columbia University, whose research involves projects like drilling boreholes in deep water to study chemicals under the seafloor.

He previously worked as an engineer in the oil industry on deepwater rigs in the Gulf of Mexico.

He said the blowout on the rig and the apparent failure of the blowout preventer was “beyond the realm of expectation,” most likely a combination of unimaginable human and mechanical error. Noting that rigorous planning precedes deepwater drilling, yet “the risk is still not zero,” he said the accident last month would encourage designers and engineers to improve the technology and procedures, so that a disaster like the Deepwater Horizon explosion could not happen again.

Still, as he watched a live feed of drilling mud being pumped into the leaking well on the seabed, he acknowledged that the science of repair and cleanup seemed lacking. “My impression is that we were unprepared for this,” he said. “There were not a lot of good technologies and techniques ready.”

William Jackson, deputy director general of the International Union for Conservation of Nature in Gland, Switzerland, said abstract devotion was misguided: “At this time in history we have great faith in having the technological ability to solve problems, and that faith has proved incorrect in this place.”

He said that even good new ideas needed funding and testing to make sure they worked. He pointed out that pledges by the coal industry and some countries to curb future carbon dioxide emissions often assume the successful evolution of technologies that are as yet unproven or have never been tried on a large scale.

“There is this belief that an engineering solution can be found as you move along,” he said, noting that carbon capture and storage — which involves pumping CO2 emissions underground rather than releasing them to the air — may be “there” as a science, but the costs prevent it from being a practical answer.

By all accounts, the oil industry is infused with this “can do” attitude: Oil running low? “Oil wells will run dry, but advances in technologies can put off the inevitable,” said a 2006 article in a newsletter of the American Oil and Gas Historical Society. In his 2005 talk, Mr. Eyton, now BP’s group head of research and technology, was not so cavalier, discussing the need for vigilant risk management.

“We find ourselves designing floating systems for 10,000 feet of water depth before the lessons of working in 6,000 feet have been fully identified,” he said.

He sang the benefits of technology while acknowledging its danger, expressing hope that fail-safe features and computer modeling could decrease the risk: “We know the premium associated with hardware reliability is high, but at this stage, operators still have a limited failure database for forecasting the required levels of intervention in ever-deeper and more remote environments.”

Technology, he added, “becomes both an enabler, while at the same time being itself a source of risk.”

In the beginning of May, a few weeks after the rig explosion, the Pew Research Center asked 994 Americans about the oil spill: 55 percent saw it as a major environmental disaster, and 37 percent as a serious problem. But at that time, at least, 51 percent also believed that efforts to prevent the spill from spreading would be successful. Hundreds of thousands of barrels of oil later, federal officials last week released a new estimate of the spill — 12,000 to 19,000 barrels a day — establishing it as the largest in American history. As Richard Feynman, the physicist, once observed, “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.” Sometimes ingenuity may not help us.

Indeed, think of all the planes grounded for nearly a week in northern Europe last month, as a volcano poured ash in the atmosphere. There was no technological fix, and many passengers couldn’t believe it. Said Mr. Kohut, of Pew Research, “The reaction was: ‘Fix this. Fix this. This is outrageous.’ ”

Seize British Petroleum (BP)

Seize BP! National Day of Action Wednesday, May 12 - Join a protest in National Day of Action--May 12

Seize BP.org

Sign the Petition at the site.

The government of the United States must seize BP and freeze its assets, and place those funds in trust to begin providing immediate relief to the working people throughout the Gulf states whose jobs, communities, homes and businesses are being harmed or destroyed by the criminally negligent actions of the CEO, Board of Directors and senior management of BP.

Take action now! Sign the Seize BP petition to demand the seizure of BP!

200,000 gallons of oil a day, or more, are gushing into the Gulf of Mexico with the flow of oil growing. The poisonous devastation to human beings, wildlife, natural habitat and fragile ecosystems will go on for decades. It constitutes an act of environmental violence, the consequences of which will be catastrophic.

BP's Unmitigated Greed

This was a manufactured disaster. It was neither an “Act of God” nor Nature that caused this devastation, but rather the unmitigated greed of Big Oil’s most powerful executives in their reckless search for ever-greater profits.

Under BP’s CEO Tony Hayward’s aggressive leadership, BP made a record $5.6 billion in pure profits just in the first three months of 2010. BP made $163 billion in profits from 2001-09. It has a long history of safety violations and slap-on-the-wrist fines.

BP's Materially False and Misleading Statements

BP filed a 52-page exploration plan and environmental impact analysis with the U.S. Department of the Interior’s Minerals Management Service for the Deepwater Horizon well, dated February 2009, which repeatedly assured the government that it was "unlikely that an accidental surface or subsurface oil spill would occur from the proposed activities." In the filing, BP stated over and over that it was unlikely for an accident to occur that would lead to a giant crude oil spill causing serious damage to beaches, mammals and fisheries and that as such it did not require a response plan for such an event.

BP’s executives are thus either guilty of making materially false statements to the government to obtain the license, of consciously misleading a government that was all too ready to be misled, and/or they are guilty of criminal negligence. At a bare minimum, their representations constitute gross negligence. Whichever the case, BP must be held accountable for its criminal actions that have harmed so many.

Protecting BP's Super-Profits

BP executives are banking that they can ride out the storm of bad publicity and still come out far ahead in terms of the billions in profit that BP will pocket. In 1990, in response to the Exxon Valdez disaster, Congress passed and President Bush signed into law the Oil Pollution Act, which immunizes oil companies for the damages they cause beyond immediate cleanup costs.

Under the Oil Pollution Act, oil companies are responsible for oil removal and cleanup costs for massive spills, and their liability for all other forms of damages is capped at $75 million—a pittance for a company that made $5.6 billion in profits in just the last three months, and is expected to make $23 billion in pure profit this year. Some in Congress suggest the cap should be set at $10 billion, still less than the potential cost of this devastation—but why should the oil companies have any immunity from responsibility for the damage they cause?

The Oil Pollution Act is an outrage, and it will be used by BP to keep on doing business as usual.

People are up in arms because thousands of workers who have lost their jobs and livelihoods as a result of BP’s actions have to wait in line to compete for lower wage and hazardous clean-up jobs from BP. BP’s multi-millionaire executives are not asked to sacrifice one penny while working people have to plead for clean-up jobs.

Take Action Now

It is imperative that the government seize BP’s assets now for their criminal negligence and begin providing immediate relief for the immense suffering and harm they have caused.

No on Prop 16, "Taxpayers Right to Vote"

by Deborah Lake

There they go again. Proposition 16 is yet another corporate power grab. This doozy of a proposition is funded primarily by Pacific Gas and Electric.

http://www.taxpayersrighttovote.com/

PG&E has spent millions of dollars in California to keep us from controlling our own public utilities. For example, "PG&E waged an unprecedented $10 million campaign against Proposition H that would have been difficult to counter in any election, but was especially daunting during a year with so many progressive issues on the ballot attracting time, resources, and volunteers." (1)

In the recent past, these utilities were closely regulated and accountable to citizens. Deregulation has turned them into unaccountable leeches on the public treasury who have millions to spend to deprive us of what remaining autonomy we retain.

Read this nonsense. It isn't even a cohesive argument about voting rights, but it's scary enough to make people believe that their rights are in danger because public entities, for which they voted, can act in their best interests and take back public services.

"Help protect your right to vote. Right now local governments in California can spend public money or incur public debt to take over private electric businesses without letting local voters have the final say in the decision. In tough economic times like these, voters deserve the right to have the final say about how our money is spent. Join us to protect the Taxpayers Right to Vote – Yes on 16." (2)

The accelerating trend toward privatizing public infrastructure should concern every citizen. In the short run, there always seems to be a savings, or a one-shot boost to budgets, when we turn a public service into a private service. In the long run, however, costs to citizens always increase. Moreover, our payments do not go to enrich our state treasury or keep state or county jobs, but rather go to enrich unaccountable players. These unaccountable players, once they get their hands on our public services, are never willing to return them to us without extracting vast sums of public money to do so. They can claim that we are "taking" their private property.

It's way past time to stop this dangerous and expensive game that our politicians are playing with our infrastructure. No on 16, and no on everything else that some giant corporation wants to do "for" us.





(1) http://www.sfcleanenergy.com/

(2) http://www.taxpayersrighttovote.com/

The Anatomy of the White House-PhRMA deal--another example of corporate control of our government

http://www.huffingtonpost.com/paul-blumenthal/the-legacy-of-billy-tauzi_b_460358.html

Please go to the link above for the video AND the full story.  The text only is below.

Paul Blumenthal

Posted: February 12, 2010 01:28 PM

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The Legacy of Billy Tauzin: The White House-PhRMA Deal

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Read More: Barack Obama , Billy Tauzin , Health Care , Health Care Reform , Max Baucus , Pharmaceutical Industry , Phrma , PhRMA Lobby , Politics News

For more research like this, visit the Sunlight Foundation's blog.

More than a million spectators gathered before the Capitol on a frosty January afternoon to witness the inauguration of Barack Obama, who promised in his campaign to change Washington's mercenary culture of lobbyists, special interest influence and backroom deals. But within a few months of being sworn in, the President and his top aides were sitting down with leaders from the pharmaceutical industry to hash out a deal that they thought would make health care reform possible.

Over the following months, pharmaceutical industry lobbyists and executives met with top White House aides dozens of times to hammer out a deal that would secure industry support for the administration's health care reform agenda in exchange for the White House abandoning key elements of the president's promises to reform the pharmaceutical industry. They flooded Congress with campaign contributions, and hired dozens of former Capitol Hill insiders to push their case. How they did it--pieced together from news accounts, disclosure forms including lobbying reports and Federal Election Commission records, White House visitor logs and the schedule Sen. Max Baucus releases voluntarily--is a testament to how ingrained the grip of special interests remains in Washington.
In the 2008 campaign, Obama declared his intention to include all stakeholders as he sought to reform the nation's health care system, but also supported key Democratic health reform policies. Among these were several that targeted the pharmaceutical industry: Allowing re-importation of drugs from first world countries with lower drug prices and providing Medicare with negotiating authority over prescription drug prices in the recently enacted Part D program. These weren't just promises, Obama had already voted for both of them as a senator in 2007. (Roll Call Vote 132 and Roll Call Vote 150.)
Set to carry out this agenda were two Capitol Hill veterans, schooled in the monied Washington culture, chief of staff Rahm Emanuel and deputy chief of staff Jim Messina. Emanuel was a former fundraiser, Clinton administration official, investment banker and member of the Democratic leadership in Congress. Messina was the former campaign manager and chief of staff to the powerful Senate Finance Committee chairman Max Baucus. Both were known for their unparalleled legislative abilities.
Because of Obama's decision to develop a plan operating through the legislative process, members of Congress also played key roles. Early on, the pharmaceutical companies were told to deal directly with Senate Finance Committee chairman Max Baucus. Baucus would be the vehicle for the deal worked out behind the scenes by the White House and PhRMA.
Central to this effort was PhRMA president, CEO and top lobbyist Billy Tauzin, a longtime Democratic member of Congress who switched party affiliations after Republicans gained control of Congress in 1994. By switching parties Tauzin was able to maintain his influence and even rose to be Chairman of the House Committee on Energy & Commerce. Tauzin became the poster child of Washington's mercenary culture. He crafted a bill to provide prescription drug access to Medicare recipients, one that provided major concessions to the pharmaceutical industry. Medicare would not be able to negotiate for lower prescription drug costs and reimportation of drugs from first world countries would not be allowed. A few months after the bill passed, Tauzin announced that he was retiring from Congress and would be taking a job helming PhRMA for a salary of $2 million.
Tauzin's job change became fodder for a campaign ad that then presidential candidate Barack Obama ran in the spring of 2008 simply titled "Billy." It featured the candidate, sleeves rolled up, talking to a salon of gasping Americans about the ways of Washington. "The pharmaceutical industry wrote into the prescription drug plan that Medicare could not negotiate with drug companies. And you know what, the chairman of the committee, who pushed the law through, went to work for the pharmaceutical industry making $2 million a year." The screen fades to black to inform the viewer that, "Barack Obama is the only candidate who refuses Washington lobbyist money," while the candidate continues his lecture, "Imagine that. That's an example of the same old game playing in Washington. You know, I don't want to learn how to play the game better, I want to put an end to the game playing."
Aiding PhRMA in their outreach to Congress would be a squadron of lobbyists to push their health care reform priorities. Over the course of 2009, the drug industry trade group spent over $28 million on in house and hired lobbyists. Aside from PhRMA's massive in-house lobbying operation, the trade group hired 48 outside lobbying firms. The total number of lobbyists working for PhRMA in 2009 reached 165. Some 137 of those 165 lobbyists representing PhRMA were former employees of either the legislative or executive branches. Of these dozens were former congressional staffers including two former chiefs of staff to Max Baucus.
According to data compiled by the Center for Responsive Politics, drug makers contributed huge sums to congressional campaign committees during the same period--from January to the end of October (4th quarter numbers are still being totaled), industry political action committees, employees and their family members flooded lawmakers with over $8 million. Those contributions tilted heavily to Democrats over Republicans by a 57 to 42 percent margin--the first time in any election cycle going back to 1990, the first year that the Center for Responsive Politics began tracking industry giving, that Democrats were so favored. Given their majorities on Capitol Hill, and the new President's intention to reform America's health care system, the new tilt was perhaps not surprising.
***
On March 5, the White House held a meeting with major health care industry leaders to try to bring them to the table and see what could be done to gain their support. In attendance were Billy Tauzin, president, CEO and top lobbyist for PhRMA, Pfizer CEO Jeff Kindler, America's Health Care Plans (AHIP) Chairman Karen Ignani, Tom Donohue of the Chamber of Commerce and Robert Wood Johnson Foundations' Risa Lavizzomourey. A day before the White House meeting Tauzin appeared on CNBC touting health care reform and promising to work closely with the Obama administration. In the interview he touted it as an "optimistic plan", acknowledging that the industry did have a few problems but was glad to have a chance to discuss these. Some were caught dumb-founded by this apparent change of heart on behalf of an industry long adverse to health care reforms.
On April 15, Jim Messina and Jon Selib, chief of staff to Senate Finance Committee chairman Max Baucus, convened a meeting at the headquarters of the Democratic Senatorial Campaign Committee (DSCC) with leaders of organized labor and health care groups, including PhRMA. At the meeting, the groups decided to form two nonprofit entities to promote reform efforts, Healthy Economy Now and Americans for Stable Quality Care, that would be almost entirely funded by PhRMA. The two groups spent $24 million on their advertising campaigns; the contract to produce and place ads went to White House Senior Advisor David Axelrod's former firm, AKPD, which owed Axelrod $2 million.
In the next month, CEO's from pharmaceutical companies would meet with Baucus and administration officials at least four times. These talks preceded a major public event at the White House, one critical to its strategy to promote health care reform. On May 11, PhRMA and other trade industry groups pledged cost cutting measures to the White House that would save, they claimed, upwards of $2 trillion over the next decade. President Obama announced the deal in the State Dining Room, flanked by leaders of the various trade groups; the administration followed up with a media blitz in the press and on the White House Web site.
The next day, Healthy Economy Now's PhRMA funded ad campaign ran their first advertisement in support of the health care reform process calling for the government to finally "fix" the nation's health care cost problems. While many elements of the $2 trillion cost cutting pledge fell apart, the drug industry remained committed to the process in the hopes that they could ultimately win out and defeat the provisions they most feared in closed-door meetings with the White House.
The first occurred on June 2. White House visitor logs show PhRMA's top executives, including Tauzin, and industry CEOs met with Sarah Fenn from the White House Office of Health Care Reform. On the same day, the publicly available schedule of Senator Max Baucus shows Tauzin and the same industry CEOs met the Senate Finance Committee chairman. What ultimately resulted from these coordinated meetings would be revealed by Baucus on June 20.
In a press release featuring a statement by Tauzin, Baucus revealed that the pharmaceutical industry had accepted $80 billion in cost cutting measures to be included in the Senate Finance Committee version of the bill. According to news reports, Baucus initially proposed $100 billion in cost cutting measures, but the executives and lobbyists meeting on June 2 were able to win the lower figure.
The terms of the initial cost-cutting deal included $30 billion go directly towards closing the "donut hole" in Medicare prescription drug coverage. The "donut hole" is a term for the gap in coverage that occurs within the Medicare prescription drug coverage. For those purchasing prescription drugs through the Medicare program coverage cuts off at $2,700 spent and does not pick back up again until $6,154 is spent by the participant. The amount proposed in the deal, 50 percent coverage for drugs within the coverage gap, however, would not completely close the "donut hole."
In Baucus' press release, Tauzin is quoted as saying, "This is a once-in-a-lifetime opportunity and, working together, we can make this hope for a better tomorrow a reality today." This "once-in-a-lifetime" opportunity also extended to the pharmaceutical industry's ability to blunt the long-term Democratic agenda of lowering prescription drug prices through Medicare negotiations, re-importation and quicker release of generics onto the market. After making such a grand statement of support through cost cutting proposals it was time for the pharmaceutical industry to finally force the White House and Democrats to take certain chips off the table.
Baucus proceeded with a plan to convene a bipartisan group in an effort to craft the bill desired by the White House. These participants included Democrats Kent Conrad and Jeff Bingaman and Republicans Chuck Grassley, Mike Enzi and Olympia Snowe. Baucus' decision and the need to solidify deals with groups like the pharmaceutical industry - which were reliant on Baucus producing a bill - slowed down the legislative process making it impossible for Congress to meet the White House's announced August recess deadline for passing health care reform.
Soon after, PhRMA's big guns and industry lobbyists paid the White House another visit on July 7 and this time met with Rahm Emanuel and Jim Messina (Baucus' chief of staff Jon Selib is also listed in White House visitor logs for this meeting). In August, The Huffington Post's Ryan Grim reported on an internal memo that was drafted at that meeting that outlined the policies that would not be allowed into any final version of health care reform. These included Medicare prescription drug negotiations, drug re-importation, and the lowering of prices for drugs available through Medicare Part D and Part B. The deal would be $80 billion in cost cutting and absolutely no more.
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While the $80 billion deal was cut with Baucus' committee, other congressional committees continued to mark-up their own versions of health care reform without the knowledge that the White House was relying on Baucus to produce the final product. In the House of Representatives, the House Energy & Commerce Committee leveled a direct threat to the $80 billion deal. Energy & Commerce Chair Henry Waxman sought to include all of the provisions that PhRMA had gotten the White House and Baucus to cut out of the reform bill. These included drug reimportation, Medicare negotiating power and speedier release of generics to the market. According to previous analysis of the measures proposed by the committee, these measures would have totaled hundreds of billions in cost cuts, far exceeding the $80 billion cap agreed to by the White House, Baucus and PhRMA.
The cost cutting measures passed in the Energy & Commerce bill spooked the board of PhRMA, which included all of the CEOs involved in the deal-cutting meetings with the White House and Baucus. The board pressured Tauzin to go public with the deal to ensure that the White House would recognize it and not renege. On August 4, the Los Angeles Times, in an exclusive report, featured quotes from Tauzin claiming that a deal between the White House and PhRMA existed and that, as Tauzin put it, "The White House blessed it." Tom Hamburger wrote in the article, "For his part, Tauzin said he had not only received the White House pledge to forswear Medicare drug price bargaining, but also a separate promise not to pursue another proposal Obama supported during the campaign: importing cheaper drugs from Canada or Europe."
The White House's Jim Messina later confirmed Tauzin's claim, stating, "The president encouraged this approach ... He wanted to bring all the parties to the table to discuss health insurance reform."
Democratic lawmakers were furious. Rep. Raul Grijalva, chairman of the Progressive Caucus, asked, "Are industry groups going to be the ones at the table who get the first big piece of the pie and we just fight over the crust?"
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On September 7, Baucus' bill made a private circulation on the Hill; pharmaceutical industry cost-cutting did not exceed $80 billion. Five days later, the New York Times reported that PhRMA planned to spend up to $150 million in an advertising blitz in support of Baucus' bill. The Times noted that the ad spending "...would be a follow-up to the deal that drug makers struck in June with Mr. Baucus and the White House." On September 16, Baucus released the full text of his legislation to the public.
The White House, PhRMA and Baucus still had to fight a few battles to keep the deal intact. The key amendment targeting the PhRMA deal in committee mark-up came from Sen. Bill Nelson from Florida, which has one of the largest Medicare participant populations in the nation. The pull of constituent needs clearly put Bill Nelson into a position to push for further cost cutting in Medicare prescription drug pricing. His target: closing the "donut hole" completely.
Nelson claimed that his amendment would generate $106 billion in revenue, or from PhRMA's perspective increase their cost-cutting to $186 billion. That would be unacceptable to PhRMA, to Baucus, to the White House and to the pharmaceutical industry who had made the deal. Other Senate Democrats, Tom Carper and Robert Menendez voted with Republicans and Baucus on the committee to defeat the amendment. It is little surprise the Carper's Delaware is home to AstraZeneca and Menendez' New Jersey is home to Merck and Bristol-Myers-Squibb, all of which lobbied for the $80 billion cap.
Senate Majority Leader Harry Reid introduced the final bill, with the cap in place, on November 19. Debate began on Dec. 3, and with it come one more attempt by members to change the terms of the deal. Senator Byron Dorgan introduced an amendment that would allow for drug re-importation, but as the date for voting drew near, the Federal Drug Administration (FDA) released a letter objecting to the proposal that echoed pharmaceutical industry talking points: "...as currently written, the resulting structure would be logistically challenging to implement and resource intensive. In addition, there are significant safety concerns." Dorgan's amendment was defeated with numerous Democrats previously in support of reimportation switching to "no" votes.
On Christmas Eve, the bill passed the Senate with the PhRMA deal fully intact.
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New Year's Eve passed with no further action on health care reform. Public opinion regarding the health care reform bill had been slipping throughout 2009. It reached a fulcrum in the special election to replace the deceased senator Ted Kennedy in Massachusetts on January 19, 2010. Newly minted senator Scott Brown campaigned that he would be the senator to provide Republicans with the votes to filibuster the final health care reform bill. Democrats ran for cover. Despite having the largest majorities of any party since the 1970s, Democrats put the brakes on their agenda, particularly health care reform.
In the end, the pharmaceutical industry's support for health care reform would be left up in the air . After spending $100 million in advertising in support of legislation that Tauzin and key executives hoped would be a windfall for the pharmaceutical industry, the legislative process had flat-lined. In February, the board of PhRMA, split over the deal cut by Tauzin, pushed Tauzin to resign his post.
In an interview with Diane Sawyer, President Obama owed up to failures in the process of passing health care reform, "[T]he health care debate as it unfolded legitimately raised concerns not just among my opponents, but also amongst supporters that we just don't know what's going on ... And it's an ugly process and it looks like there are a bunch of back room deals."