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.

 

Around the Web: Landmark or Pit Stop?

I understand why people feel the need to tout the historical significance of the financial reform package that passed the conference committee. The president needs it politically and those who support him want to give him credit for getting anything at all in the face of the onslaught of bank lobbyists. Lots of folks worked very hard against tremendous odds to get something passed.

But I think a more sober analysis shows that what’s been achieved is pretty modest. It hands over many crucial details to the same regulators who oversaw our financial debacle.

Summing up, Bloomberg reports: “Legislation to overhaul financial regulation will help curb risk-taking and boost capital buffers. What it won’t do is fundamentally reshape Wall Street’s biggest banks or prevent another crisis, analysts said.”

Zach Carter characterizes it as a good first step. The Roosevelt Institute’s Robert Johnson writes: “This first round was not the whole fight. It was the wake-up call and the beginning of the fight. Rest up and get ready. There is so much more to do.”

The question is when we’ll get the chance to take the additional steps that are needed. The public is skeptical that the new rules will prevent another crisis, according to this AP poll. The Big Picture’s Barry Ritholtz grades the various aspects of the reform effort. Overall grade? C-. Top marks go to the new minimum mortgage underwriting standards. But legislators get failing grades for leaving four critical issues on the table: “to big to fail banks,” bank leverage, credit rating agencies and corporate pay.

Ritholtz saves some of his harshest evaluation for the proposal to house the new consumer protection agency inside the Federal Reserve, which he finds “beyond idiotic.”

Around the Web: Rewarding Fed Failure

Bottom line on the new Chris Dodd reform proposal: much watered down from his earlier proposal and maybe even weaker than the weak House bill.

Here’s the summary from A New Way Forward: “The bill contains no real solution to too-big-to-fail, no real enforcement guarantees, the bad guys are off the hook, the financial system will continue to be as big and dangerous and full of risk taxpayers will likely own. Dodd made a few good steps forward and major steps backwards”. The rest of their analysis is here.

From the Atlantic Wire, a solid roundup of assessments. The takeaway: Too many concessions to the big banks, and it is still faces many obstacles to passage. And who exactly besides Chris Dodd and Wall Street thinks it’s a great idea to house consumer protection within the Federal Reserve? Only last year, Reuters reminds us, Dodd was labeling the Fed “an abymsal failure."

But Elizabeth Warren, the congressional bailout monitor who has campaigned aggressively for strong reform, including an independent agency to protect financial consumers, offered a lukewam endorsement of Dodd’s plan.

I’ll give Alan Sherter the last word. When Dodd says that he doesn’t have the votes for an independent financial consumer protection agency, what he really means is that “lawmakers have more to gain by advocating the interests of banks than those of consumers.”