Left, right and left out

On so many issues related to the state of our economic recovery, current notions of liberal and conservative don’t seem to apply.

For example, should we allow a real free market to work in our financial system?

Should we crack down hard on those Wall Street bankers who broke the law?

Should companies that want to foreclose on property have to follow the law?

If you’re in favor of real financial free market, tough law enforcement and following the law, are you conservative or liberal, left or right?

What you are is in the majority, and the most important political designation in the U.S. in 2012 – left out.

Your views are reflected only rarely in the political debate at all and never in the presidential debate. Sure, President Obama has repeatedly promised to get tough on Wall Street, most recently in the state of the union in January, but based on the results, those promises have little credibility. President Obama preaches for an activist role for government with the occasional populist flourish, but that impulse wilts if Republicans or campaign funders show the least resistance.

His opponent, Mitt Romney, considers any crackdown on Wall Street an affront to the beloved job creators to whom we should all be bowing down – even if they don’t actually use their wealth to create any decent jobs.

What we get instead of a real debate on how to get an economy that works for ordinary folks is a faux argument over the role of venture capitalist tycoons, between the candidate who used to be one and our president, who has relied on them a key source of campaign funding as much as Romney has.

What we get is the fiscal cliff drama about whether or not to shut down the government.

What we get is each side offering scary versions of what the other will do.

What we get are Mitt Romney’s assurances that if we just get the regulators out of the way, the wealthy job creators will get to work, regardless of whether anybody can afford to buy their products.

What we get is the president’s half-measures and handwringing. But it’s all political theater that doesn’t replace real jobs, real plans to revive housing and keep people in their homes and real accountability for bankers. It doesn’t replace a real debate about the role of big money in overshadowing those issues in our elections. Right now, both sides have left those out of their campaigns.

Politics is a team activity and our natural tendency is to root for our guy, downplay his flaws, and point out how much worse the other guy would be. But this election should not just be rooting for our team and beating the other guy. It should not be about rooting for our guy we’re so hyped up about how scary the other guy is.

It should be about who is willing to confront the big money, not bend to it.

It should be about who can really get people back to work, keep us in our homes, guide an economic recovery that’s not just for the wealthiest.

We should demand that we’re more than just a rooting section for our team, that our bread and butter concerns are not left out.

 

 

 

Different strokes for different protestors

Operating on very different pieces of turf, the Occupy movement and the budding shareholder revolt are putting the status quo on notice: no more business as usual.

With May Day marches across the country earlier this month, the occupiers signaled they’re not going away. They intend to keep taking public space, protesting and reminding the country what our democracy has lost in a takeover by corporate powers.

Meanwhile, corporate shareholders appeared to be slumbering in the wake of the financial crisis, lulled by soothing predictions about economic recovery and buoyed by a stock market recovery.

But taking advantage of an advisory vote granted them in the Dodd-Frank financial reform legislation, shareholders have recently taken highly publicized swipes at excessive compensation plans for CEOs at Citibank and British Petroleum and several smaller banks.

At Citibank, 55 percent of shareholders rejected the notion that a company whose shares dropped 45 percent over the past year, wiping out $60 billion in shareholder equity, owed its CEO a $15 million salary hike. Citibank’s board said it would carefully consider the shareholders’ concerns.

CEO compensation plans narrowly won approval at General Electric, where the value of the stock has fallen 45 percent over the past 5 years, as well as at insurance giant Cigna, but not without noisy protests. At Credit Suisse and Barclays, a sizeable minority of shareholder voted against their executives’ compensation packages.

And excessive compensation is not the only thing shareholders are upset about. Some Cigna shareholders also expressed their opposition to the $1.8 million Cigna spent lobbying against health care reform in 2009.

At Wellpoint and Aetna insurance companies, shareholders want company officials to improve disclosure of their political spending, after the Center for Political Accountability found that both companies’ disclosure policies "leave significant room for serious misrepresentation of the company's political spending through trade associations."

Four of Wellpoint’s directors who are standing for reelection also face unusual no vote campaigns because the company has failed to live up to earlier commitments to improve disclosures of their political spending.

To be sure, these actions represent only a small number of corporations so far; most shareholders are approving without a fight the executive pay plans proposed by the board of directors’ compensation committees.

But like the occupiers protesting in the public square, the shareholders at these major corporations have driven a very large, sharp stake into their turf, and these first, highly publicized steps toward more accountability and transparency are likely to inspire more like them.

Occupiers, with their horizontal leaderless anarchist principles and drum circles, and shareholders, with their focus on the bottom line, might not seem to share much other than a desire for more accountability and a sense that the system as it is, isn’t working. But both groups are equally shut out of this political season, with neither party doing anything but paying the slightest lip service to their issues.

The occupiers and the shareholders are also carrying an important message for the rest of us: democracy isn’t just a matter of walking in to the ballot box and pulling the lever for our team every four years and waiting for the politicians to fix our problems.

 

 

 

 

No-fault settlement fuels never-ending bailout

Two striking details reveal the true nature of the highly touted national foreclosure settlement.

The first is that the banks admit no wrongdoing.

Here’s a sample of the illegality and the misconduct with which the federal authorities and the 49 state attorneys general charged the banks. It goes way beyond robo-signing, the banks’ widespread practice of using forged or unverified documents in the foreclosure process:

▪                Providing false or misleading information to borrowers,

▪                Overcharging borrowers and investors for services of dubious value,

▪                Denying relief to eligible borrowers,

▪                Foreclosing on borrowers who were pursuing loan modifications,

▪                Submitting forged or fraudulent documents and making false statements in foreclosure and bankruptcy proceedings

▪                Losing or destroying promissory notes and deeds of trust,

▪                Lying to borrowers about the reasons for denying their loan modifications,

▪                Signing affidavits without personal knowledge and under false identities,

▪                Improperly charging excessive fees related to foreclosures

▪                Foreclosing on service members on active duty

▪                Making false claims to the government for insurance coverage

But the feds and the state attorneys general want to let the banks off the hook without having to admit to any of it.

This is the kind of no-fault settlement for which the Securities and Exchange Commission has increasingly come under fire, [but which companies agree to as a cost of doing business. For example, the national foreclosure settlement only costs the banks about $5 billion in real money, a drop in the bucket compared to their profits. It’s not enough to actually deter the banks from future bad conduct.

The rest of its estimated $25 billion value is supposed to be determined by a complex series of credits that the bankers get for what they should be doing anyway – modifying mortgage loans and offering principal reductions to underwater homeowners.

The authorities still have to get a judge in Washington, D.C. to sign off on it.

Too bad the settlement wasn’t presented to U.S. District Judge Jed Rakoff in New York, who’s been adamant in questioning no-fault settlements and refusing to rubber stamp them.

His comments, though directed at the SEC, are relevant to the national foreclosure settlement.

Rejecting an SEC no-fault settlement with Citigroup last November, Judge Rakoff said that such settlements are “hallowed by history, but not by reason” and create the potential for abuse because they ask “the court to employ its power and assert its authority when it does not know the facts.”

Rakoff questioned what government officials would get from the settlement “other than a quick headline.”

Though he was talking about an SEC settlement with Citigroup, he could have been describing the national foreclosure settlement, which exacts too little a price from banks for their wrongdoing and offers too little to homeowners.

The settlement provides that banks will spend $17 billion on principal reductions and another $3 billion on refinancings. But according to an analysis by the Brooking Institute’s Ted Gayer, less than 5 percent of the nation’s 11.1 million homeowners will qualify for help under the settlement.

It also presents the general laundry list of wrongdoing without any specificity – it names no names or specific facts. One of the big criticisms of the foreclosure settlement is that the authorities didn’t do a real law-enforcement style investigation to assemble a case before sitting down to “negotiate” the settlement, weakening their hand with the banks.

The second aspect of the foreclosure settlement that reveals its weakness is how the authorities are suggesting they’re going to monitor whether the banks will comply. Just exactly how are we going to make sure that the big banks deliver even the relatively small number of loan modifications and principal reductions they’ve promised?

According to the settlement, the banks themselves are going to self-report on their progress.

Then an “independent” monitoring committee is going to check these reports, and then levy fines if the banks aren’t hitting certain targets. But the monitors consist of the same regulators who have already facilitated the banks’ earlier failed foreclosure mitigation efforts, and have touted this current settlement as a “landmark.” Having already proved their reluctance to get tough on the banks so far, how much incentive do they have to get tough with banks later on?

It sounds flaky to me.

The whole robo-signing scandal stems from banks use of forged, false or unverified documents, poor recordkeeping and the inability of anybody in the courts or government to get the banks to follow the law or hold them accountable.

On top of that, when it comes to keeping their previous commitments to deliver loan modifications in earlier attempts to address the foreclosure crisis, the banks have failed miserably.  The investigative journalism outfit Pro Publica has assembled reams of data about the shortcomings of previous government-sponsored loan modification efforts.

So now we think it’s a good idea for them to police themselves?

The entire settlement looks more like the government’s latest efforts to prop up the nation’s floundering too big to fail banks than a real attempt at either law enforcement or robust help for homeowners and the housing market.

Where is Judge Rakoff when we really need him?

 

Is There a Secret White House Memo on Corporate Control of our Country?

An internal White House memo in 2010, just before the Supreme Court’s outrageous decision in Citizens United, suggested President Obama address the influence of money in politics. Other items crowded his agenda instead, but this election year President Obama would be wise to take up the citizen call for a 28th Constitutional Amendment to end the corruption caused by the Court’s corporate personhood decision.

First, some important background on the 2010 memo. It used to be that a history of a presidential administration would await the president’s departure, but in recent years mid-term profiles have become the norm. Bob Woodward chronicled the Bush White House with four books, and Ron Suskind’s “Confidence Men,” published last year, captured President Obama’s errors in strategy and communications. Both authors had access to sources close to the top of the White House. But this week’s New Yorker takes the genre to a new level. Ryan Lizza’s “The Obama Memos” is a fascinating analysis of the Obama presidency that relies greatly on White House memos that Lizza somehow obtained.  One of them, the transition team’s memo to the president-elect in 2008 on the economy, is available in its entirety for download on the New Yorker site.

It was another memo, excerpted in a sidebar, that really got my attention. It was from the President’s political advisers, in late December 2009 according to Lizza, and listed “ideas on how on how try and recapture some of the anti-Washington spirit of his 2008 campaign” in the President’s 2010 State of the Union address. One of the suggestions in the memo anticipated the Supreme Court’s decision in the Citizens United case.

Campaign Finance reform: By the time of the SOTU [State of the Union], the Citizens United case will have been handed down and at the time of the decision will likely make an announcement on our response/plans. We could use the SOTU opportunity to push the ball forward on whatever proposal we put forward, calling on Congress to act by a ‘date certain’ or further fleshing out our proposals.

The Court handed down its decision on January 21, just a week before the State of the Union speech. Of course, no one expected the decision to cement into American Constitutional law the proposition that corporations have the same First Amendment rights as human beings and that spending money to influence elections is a form of free speech. So when the advisers referred to the White House's “response/plans,” it was not clear what kind of decision they were expecting, or what they thought they could do about it.

We now know that the only thing that can be done about Citizens United is for the American people to join together to overrule it, by passing the 28th Amendment to the Constitution, such as the one we have proposed.

Meanwhile, the President had something to say about corporate money in politics at the end of his State of the Union speech on January 27, 2010, and it stirred quite a controversy. He began by noting that a byproduct of the 2008 financial collapse was the public’s loss of confidence in government of, by and for the people:

We face a deficit of trust -– deep and corrosive doubts about how Washington works that have been growing for years. To close that credibility gap we have to take action on both ends of Pennsylvania Avenue -- to end the outsized influence of lobbyists; to do our work openly; to give our people the government they deserve.

 Then, with members of the Supreme Court seated right in front of him, he slammed the Court’s ruling in Citizens United:

With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests –- including foreign corporations –- to spend without limit in our elections. I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. They should be decided by the American people. And I'd urge Democrats and Republicans to pass a bill that helps to correct some of these problems.

It was a powerful moment, to be sure, though hardly the assault on the Court that it was subsequently described as, at least in some quarters.

What happened next created the evening’s drama. Supreme Court Justice Samuel Alito, who had voted in favor of the Court’s ruling, took it upon himself to provide some instant analysis. Cameras caught Alito angrily mouthing the words “not true” in response to Obama’s critique. The New York Times recalled the moment recently.

Whatever the President or anyone else thought that night about the week-old decision, it has since opened the floodgates of corporate money while individual Americans – I’m referring to the human beings who cast ballots, not so-called "corporate citizens" – have become bystanders. Decades-old laws limiting the influence of big money in politics have fallen, with few exceptions – one of which I wrote about last week.

It’ll likely be a few years before we get to read the memos that his political team is forwarding President Obama this year. But focus on Citizens United and the power of corporations to determine the outcome of supposedly “free” elections in what is proudly hailed as the world’s greatest democracy is certainly consistent with the themes of government accountability and the ninety nine percent vs. the one percent that are dominating public discourse and even the debates between the pro-corporate Republican presidential candidates. Obama would find a welcoming, bipartisan audience for the 28th Amendment. Let’s see how far he’s prepared to go.

 

Court vs. Court

I’ve been a lawyer for thirty-two years, and I’ve never read a judicial decision like the one that the Montana Supreme Court issued last December 30.

While every court in this country – from the lowest state court to the federal tribunals – sees its job as obeying the dictates of the United States Supreme Court, the Montana Supreme Court chose to obey the U.S. Constitution instead.

The bottom line: the Montana court refused to comply with the US Supreme Court’s infamous 2010 decision in Citizens United, which struck down legal limits on how much corporations could spend on electing politicians or passing ballot measures. The Supreme Court ruled that corporations have a First Amendment right to intervene and influence our democracy with cash. Spending money is a form of free speech, said five of the nine justices. And by that one vote majority, the United States Supreme Court made corporations more powerful than government, more powerful than human beings. The second anniversary of the Citizens United ruling sparked a day of national protest, as my colleague Marty Berg reports.

Like many states, Montana had strong campaign spending laws, including disclosure of campaign contributors and one that prohibits corporations from giving money directly to candidates for public office out of the company treasury. Instead, corporations that want to get involved in elections are required to set up a special fund that can receive donations from individual corporate employees or shareholders and use that money for gifts to politicians or political causes.

As the Montana opinion explains, a Colorado-based organization known as “Western Tradition Partnership” sued to invalidate Montana’s corporate campaign controls, saying they were unconstitutional under Citizens United. Now known as “American Tradition Partnership,” the organization’s supporters and funding are murky, but it’s views are clear: it is extremely anti-environment. The Montana Supreme Court described its purpose as “to act as a conduit of funds for persons and entities including corporations who want to spend money anonymously to influence Montana elections. WTP seeks to make unlimited expenditures in Montana elections from these anonymous funding sources. WTP’s operation is premised on the fact, or at least the assumption, that its independent expenditures have a determinative influence on the outcome of elections in Montana.”

Lots of states have dealt with Citizens United by repealing or rewriting their campaign spending laws. Not Montana.

The Montana Supreme Court decision begins by discussing how in the late 1800s, big mining interests used money to back or bribe elected officials in Montana to take control of state government. The corruption got so bad that many citizens of the state lost their faith in government. “This naked corporate manipulation of the very government (Governor and Legislature) of the State ultimately resulted in populist reforms that are still part of Montana law,” writes Montana Chief Justice Mike McGrath. Among the reforms: the initiative process, and, in 1912, the limits on corporate spending.

“The question then, is when in the last 99 years did Montana lose the power or interest sufficient to support the statute, if it ever did,” the Chief Justice writes. If the statute has worked to preserve a degree of political and social autonomy is the State required to throw away its protections because the shadowy backers of WTP seek to promote their interests? Does a state have to repeal or invalidate its murder prohibition if the homicide rate declines? We think not.”

While the US Supreme Court justices saw no “compelling interest” in limiting corporate contributions, the Montana Supreme Court had a different view: “Montana has a clear interest in preserving the integrity of its electoral process”;  “it also has an interest in encouraging the full participation of the Montana electorate”; and “a continuing and compelling interest in, and a constitutional right to, an independent, fair and impartial judiciary,” one that is not subject to being bought by corporations who elect friendly judges.

Concluding that “the impact of unlimited corporate donations creates a dominating impact on the political process and inevitably minimizes the impact of individual citizens,” the Montana Supreme Court refused to apply Citizens United and upheld the state’s campaign 100 year old reform law.

But that was only the majority opinion. Wait till you hear what the two dissenting justices had to say:

The first, Justice Beth Baker: “The value of disclosure in preventing corruption cannot be understated.” But, she continues, “I believe it is our unflagging obligation, in keeping with the courts’ duty to safeguard the rule of law, to honor the decisions of our nation’s highest Court.”

Justice James Nelson gets the last word, and it’s a doozy.

He writes:

“I thoroughly disagree with the Supreme Court’s decision in Citizens United…. I am deeply frustrated, as are many Americans, with the reach of Citizens United. The First Amendment has now been elevated to a vaunted and isolated position so as to endow corporations with extravagant rights of political speech and, with those rights, the exaggerated power to influence voters and elections….. In my view, Citizens United has turned the First Amendment’s 'open marketplace' of ideas into an auction house for Friedmanian corporatists. Freedom of speech is now synonymous with freedom to spend. Speech equals money; money equals democracy. This decidedly was not the view of the constitutional founders, who favored the preeminence of individual interests over those of big business.”

“It defies reality to suggest that millions of dollars in slick television and Internet ads—put out by entities whose purpose and expertise, in the first place, is to persuade people to buy what’s being sold—carry the same weight as the fliers of citizen candidates and the letters to the editor of John and Mary Public. It is utter nonsense to think that ordinary citizens or candidates can spend enough to place their experience, wisdom, and views before the voters and keep pace with the virtually unlimited spending capability of corporations to place corporate views before the electorate.”

“I absolutely do not agree that corporate money in the form of ‘independent expenditures’ expressly advocating the election or defeat of candidates cannot give rise to corruption or the appearance of corruption. Of course it can. Even the most cursory review of decades of partisan campaigns and elections, whether state or federal, demonstrates this. Citizens United held that the only sufficiently important governmental interest in preventing corruption or the appearance of corruption is one that is limited to quid pro quo corruption. This is simply smoke and mirrors.”

Citizens United distorts the right to speech beyond recognition. Indeed, I am shocked that the Supreme Court did not balance the right to speech with the government’s compelling interest in preserving the fundamental right to vote in elections.”

“I am compelled to say something about corporate ‘personhood.’ While I recognize that this doctrine is firmly entrenched in the law… I find the entire concept offensive. Corporations are artificial creatures of law. As such, they should enjoy only those powers—not constitutional rights, but legislatively-conferred powers—that are concomitant with their legitimate function, that being limited-liability investment vehicles for business. Corporations are not persons. Human beings are persons, and it is an affront to the inviolable dignity of our species that courts have created a legal fiction which forces people—human beings—to share fundamental, natural rights with soulless creations of government. Worse still, while corporations and human beings share many of the same rights under the law, they clearly are not bound equally to the same codes of good conduct, decency, and morality, and they are not held equally accountable for their sins. Indeed, it is truly ironic that the death penalty and hell are reserved only to natural persons.”

Having explained, in the most vivid terms, why Citizens United was decided wrongly, Justice Nelson concludes: “I must return to the central point of this Dissent. Regardless of my disagreement with the views of the Citizens United majority, the fact remains that the Supreme Court has spoken. It has interpreted the protections of the First Amendment vis-à-vis corporate political speech. Agree with its decision or not, Montana’s judiciary and elected officers are bound to accept and enforce the Supreme Court’s ruling….Citizens United is the law of the land, and this Court is duty-bound to follow it.”

Students of the law know that courts are always disagreeing with each other. Like the majority of the Montana Supreme Court, judges seek to “distinguish” the circumstances of one case from the facts in another in order to rule a different way. But rarely do the cases involve issues so fundamentally important to the nation; rarely are the stakes so great and rarely are the differences so stark. My guess is we're going to be seeing more of this gentle judicial civil disobedience as the present US Supreme Court ventures ever farther into the realm of re-writing the Constitution.

All the Montana justices seemed to agree that the United States Supreme Court had made a terrible decision in Citizens United. It’s most vehement critic on the Montana court, certain of that as he was, nevertheless felt bound to obey a higher principle – to obey the law of the land. If only the five justices in Washington had felt the same way.

 

 

Break of Day

Last August, right-wing television host Glenn Beck made a bizarre attempt to hijack the spirit of Martin Luther King’s 1963 Freedom March with his own manipulative March on Washington.

Millions of Americans wrung their hands in despair as Beck and his colleagues from Fox News and the Tea Party stood on what was deemed sacred ground and dominated the political discourse, while our own leaders failed to respond to the worst economic downturn since the Great Depression or to hold Wall Street accountable for causing it.

Then last fall, the Occupy Wall Street movement arrived.

Although the media tried to ignore them and then proceeded to belittle them, Occupiers tapped into a deep-seated longing, capturing the public imagination with their 21st century take on King’s message: overcome despair, shame and division; organize and dare to imagine; and fight nonviolently for a better society for everyone.

We don’t need a séance to know that for Martin Luther King, the notion that our government would dare to characterize the economy as “in recovery” while black unemployment remains nearly twice the national average would be an outrage, not a footnote.

Unlike the Tea Party, Occupy has avoided electoral politics, preferring to focus, as King did, on empowering the powerless through direct action on the streets. And while some have criticized Occupy for not delivering a more focused message, the Occupiers have clearly picked up the spiritual aspect of King’s call to action, posing profound questions about the kind of society we have become and what kind of society we want to be.

Occupy’s debt to King's non-violence is direct: In Los Angeles, activists are integrating techniques developed in the antinuclear and anti-globalization movements with the techniques taught at free monthly classes with the Reverend James Lawson, one of the men who guided King and taught him about Mahatma Gandhi’s nonviolence strategy.

During the last year of King’s life, he expanded the focus of his actions and goals beyond African-American civil rights to building an all-encompassing movement to challenge U.S. militarism and poverty. His last appearance in Memphis was in support of a strike by sanitation workers, opening his arms wide to embrace the cause of what Occupy has forever branded “the 99 percent.”

Beck’s travesty in Washington hit rock bottom for those of us who have been observing and decrying a system that seems designed to benefit those whose values preclude equality and fairness. The assault on the middle class in our country has been brutal. There was—during those dark August days—no loud voice, outside the rarified world of blogs and op-ed pages, crying out in moral outrage.

In September, a small band set up camp in Zuccotti Square. Since that time, the Occupy Wall Street movement has ignited those cries, on the streets and from a growing number of pulpits nationwide.

These are the spirits that endure and the ties that bind.

For me and for many others, embracing the Occupy movement posed a challenge. As a long-time journalist, I’ve had to find a new kind of voice. Like so many friends and colleagues who had lost faith that we would ever be heard, I’ve had to overcome fear and cynicism, learn to act more boldly, engage more creatively.

The memory of the Reverend Martin Luther King reminds us that whatever our obstacles, we need to link arms and learn to put one foot in front of the other, keeping our eyes on the prize, a prize that belongs to all of us.

Re-Bending the Moral Arc of the Universe

Thanks largely to the Occupy movement, the disparity between the incomes of the wealthiest Americans and everybody else – now a chasm of historic proportions – has exploded onto the national consciousness. Even the Republican presidential candidates have stumbled into the fray; motivated by the fact that the current frontrunner is a financier, they are arguing over what they insist are the differences between “venture” capitalism (good) and “vulture” capitalism (bad).

Debating the role of finance and speculation in our economy in this election year is a bit of good news for beleaguered Americans who have been steadily losing their economic standing for decades and encouraged to offset that long decline through borrowing on credit cards and homes – until this house of cards collapsed in 2008.

This is a discussion that President Obama should embrace for reasons that transcend the usual relentless drive to get re-elected. Obama has frequently recalled Martin Luther King’s dictum that “the arc of the moral universe is long but it bends toward justice.” Economic inequality became as much a priority for King as racial inequality towards the end of his life. As Ron Suskind points out in his masterly assessment of President Obama’s first years in office, Confidence Men, King wrote that, “‘the contemporary tendency in our society is to base our distribution on scarcity, which has vanished, and to compress our abundance into the overfed mouths of the middle and upper classes until they gag with superfluity. If democracy is to have breadth of meaning, it is necessary to adjust this inequity.”

That adjustment is now a matter of great urgency, because the arc of the moral universe has been twisted away from justice.

The middle class is no longer riding the coattails of the rich. To the contrary, the American dream – that through hard work one can hoist oneself up from modest beginnings or even poverty to a better life – has vanished. The Wall Street Journal reports that the economic recovery may take generations. LINK. Saturday’s New York Times contains an interactive feature that illustrates the deepening divide between the wealthy and everyone else. It lets you check out which professions are more likely to usher you into the 1% club, and how much you need to make to qualify as a member of the 1% in various cities throughout the country. ’

Readers' comments to the article are poignant in their reflection of the profound economic struggle so many Americans are facing. Not all those among the 1% are defensive; indeed, many who might be in the 1% themselves point out that when it comes to the distribution of wealth, and the opportunity that wealth provides, it’s really the .01% at the topmost pinnacle vs. the 99.99% – a distinction the data confirms.

Whatever the numerical pivot point, the destruction of the middle class in this country is a stunning transformation that King would have seized upon. As a community organizer, he understood the importance of calling out inequality wherever it is found in order to engage the powerful force that is the American people. Demanding the attention of the affluent, and their intervention, King said, “Injustice anywhere is a threat to justice everywhere.”

Contrary to some pundits and outspoken advocates of the .01%, challenging the increasing distance between the “haves” and the “have nots” – now that the category of “I have because I borrowed to get it” has been foreclosed – isn’t class “warfare.” As the New York Times pointed out: “Class reality has nothing to do with class warfare.”

The super-elites do not want the presidential candidates even to broach the subject of income inequality because they understand, as King knew, that the discussion inevitably will lead to a national demand for action by the 99.99%, which, to this point, is disorganized, fractured and only dimly aware of the strength they might wield if they were united.

Consider this historical example. Back in the mid-1980s, auto insurance rates in California were skyrocketing. Auto insurance companies weren’t just jacking up everyone’s premiums; they were basing rates on where a person lived, rather than their driving safety record. So people who lived in low-income neighborhoods often paid more for the insurance they were required by law to buy – if they could afford it at all. People who couldn’t afford it – lower middle class and the poor – were surcharged with a penalty for not having had prior insurance when they later scraped the money together to buy it. Not surprisingly, there were lots of uninsured motorists on the road, which forced up the price of insurance for those who did buy it. It all came down to one problem: insurance companies were unregulated and free to impose arbitrary prices. But the insurance lobby was able to block any reforms in the state legislature by pitting urban vs. rural drivers, and the middle class against the poor.

California voters, presented with the opportunity, were not so easily manipulated. By directly attacking and then addressing the inequities in the insurance marketplace, Proposition 103 educated and united the constituencies: the 1988 measure mandated an across the board, twenty percent rollback of auto, home and small business insurance premiums. It also ended zip-code based premiums for auto insurance. Everyone saved money; the only losers were the insurance companies. The industry spent an unprecedented $63 million on advertisements scapegoating the urban and, with a thinly veiled racial tinge, the poor. But the strategy didn't work. The voters saw through the industry’s cunning and passed the initiative, with conservative Republicans in Orange County joining Democrats in Los Angeles to provide the margin of victory.

As a candidate in 2008, Obama promised that the presidential election would be meaningful to the vast majority of Americans who had been disenfranchised by the corrupt political system that precipitated the financial collapse. But he failed to wield his victory as a sword on behalf of those Americans. Now he has a chance to win a second chance to do so. He faces a much tougher battle this time around, among other reasons because corporations are far more deeply entrenched in the guts of the democracy, thanks to the U.S. Supreme Court’s decision in Citizens United, which has unleashed the furious, dominating power of corporate money in electoral campaigns.

The nation’s future cannot be dictated by the 1% and their money  – not if the country is to retain the democracy that was bequeathed to us by the Founders. If Obama or some other candidate engages the citizenry in a debate over the foundational issue of economic inequality, and offers a vision of democracy in which regular people are back in charge – starting with a constitutional amendment restoring the primacy of humans over money in the electoral process – he will be able to lay claim to having re-bent the moral arc of the universe traced by King.

Where’s Our Bailout? (Redux)

Between August 2007 and April 2010, the U.S. Federal Reserve handed out up to $1.2 trillion in public money to banks and other companies in the form of short-term loans to help them cope with cash flow problems, according to a recent report by the Bloomberg news service. In addition to U.S. banks and speculators, big bucks went to financial institutions owned by foreign governments; domestic firms like Ford and G.E. as well as Toyota and Mitsui and a German real estate investment firm.

While American taxpayers kept big businesses all over the planet alive, no such loans are available to taxpayers to cover their own personal cash-flow problems, including not being able to pay their mortgages, monthly bills, put food on their tables or a few holiday presents under the tree.

New figures, ironically also issued by the Federal Reserve, show how much help $1.2 trillion could be – if put in the hands of Americans. According to the Fed, the total amount of all money Americans owed on their credit cards as of last September was $693 billion. All of that could be paid off – in full – leaving another $500 billion, say, to help people avoid foreclosures or give every consumer in the United States a hefty tax cut.

Imagine the “stimulus effect” on our economy of paying off every credit card in the nation.

Although the Fed has portrayed the bailouts as the only way to keep money flowing in the economy, the Money Industry has yet to open its spigot and expand lending. Instead, they’ve used our dollars mostly to inflate CEOs’ executive salaries and pay themselves even more ridiculous bonuses.

Zeroing out America’s credit cards would solve that problem instantly. The credit card companies would get the money, of course, but Americans could start fresh and begin investing in their families, their businesses and their local economies.

Unfortunately, our country’s leadership owes its allegiance to the multi-national mega-corporations that grease the system with billions of dollars in campaign contributions. Wall Street’s “investment” in Washington caused the financial depression we are in today, and its no wonder that Washington’s attention is focused so narrowly on the welfare of the wealthy and large corporations. In fact, with its infamous decision equating corporations to human beings, the United States Supreme Court has turned the corruption of our democracy by money into a principle of our Constitution. Until we change that, Americans will be second class citizens in a country controlled by wealth and power.

 

All the President's Millionaires

While there’s some shuffling of desks close to President Obama, the most important factor isn’t changing ¬– the 1 percent is retaining a tight grip on the administration.

Exit Bill Daley (income from J.P. Morgan in 2010 = $8.7 million). Enter Jacob Lew (income from Citigroup in 2010 = $1.1 million). Lew was CEO of the Citigroup division that invested in credit default swaps, among other risky investments that sank the economy. But the bank, which survived only thanks to taxpayer generosity, paid Lew a $900,000 bonus.
Were they really paying him for overseeing the investments that nearly sank the bank – or were they compensating him for the work he did for the bank while he served in the Clinton administration, betting that Lew would serve again?
And who can forget Daley’s predecessor, Rahm Emanuel, who got paid $16.2 million during a 2 1/2/ year as an investment banker, and remained a hedge fund favorite?
Meanwhile, still firmly in place near President Obama’s ear as his closest outside adviser on creating jobs is Jeffrey Immelt, CEO of General Electric. The Center for Public Integrity’s i-watch news is out with a devastating investigation into how GE under Immelt lost more than $1 billion getting into the subprime loan business, ignoring its own whistleblowers who were trying to tell their bosses how the irresponsible pursuit of profits led to widespread fraud.
This is more than just inside baseball – with these people in charge of the Democrats and the Republicans as well, there’s little hope that the administration will come to grips with the foreclosure crisis – or hold bankers accountable for looting and tanking the economy. Only a huge public outcry, much larger than the Occupy has mustered so far, can hope to change that.

We the Fee

I couldn’t find any comment from the Republican presidential candidates on one of the most compelling financial events of the last week: Verizon’s virtually instant reversal of its $2 fee on people who pay their wireless bills over the phone or online.

Nor apparently did the White House have anything to say, even though the Federal Communication Commission’s announcement that it was “concerned” about the fee no doubt factored into Verizon’s decision. The FCC, once the cell phone industry’s best friend in Washington, D.C., has morphed into something actually looking like a consumer protection agency under Obama. It also killed the AT&T – T-Mobil merger that would have destroyed competition in the wireless marketplace and led to vastly higher prices and much worse service. The President certainly deserves a victory lap – and could use one – but remained incommunicado during his vacation in Hawaii.

Nothing from the Tea Party or Occupy Wall Street either.

Fees have become the bane of the American consumer. Airlines make more money from fees than from air fares. Banks replaced tellers with machines and now force their customers to pay $3-$5 for the privilege of accessing their own money. Hotels apply “resort fees” for using the typically impoverished gym. And then there is the coup de grace: the fee you have to pay for getting a bill in the mail – a favorite of the cell phone and health insurance companies.

Undisclosed, or at best hidden in the fine print, these fees cripple consumers’ ability to compare prices. Which becomes a nightmare if you realize you are paying too much and decide to take your business elsewhere: many of these companies require you to stay with them for two years or pay an early termination fee in the hundreds of dollars.

Verizon’s retreat from the fee was a major victory for consumers, who organized a massive internet/Twitter/Facebook protest worthy of Zuccotti Park or Tahrir Square. In November, Bank of America tried to institute a $5 fee for using a debit card – it too was forced to back down in the face of national outrage.

How then to explain the silence of political candidates and public officials? The simple answer harkens back to the Occupy metaphor. The political class doesn’t sweat the small stuff like a $2 fee – they can afford not to. But most Americans can’t afford to throw away two bucks.