Wednesday, February 10, 2010

Hey, That Horse is Still Alive!: More on Citizens United

In This Issue:

- Ralph Nader on Citizens United & What Can Be Done About It

- Polls on Citizens United and Limiting Corporate Speech

- Paul Krugman and Simon Johnson on Obama Sucking Up to Wall Street


The Case Against Corporate Speech

By Ralph Nader and Robert Weissman

February 10, 2010 " Wall Street Journal" -- Last month, by a vote of 5 to 4, the U.S. Supreme Court gave carte blanche to the world's largest corporations to spend unlimited sums of money to support or oppose candidates for elected office. Big Business domination of Washington and state capitals will now intensify.

The case of Citizens United portends dire consequences for the nation's constitutional premise of "we the people," not we the corporations. Our constitution, at its origins and through all of its amendments, makes no mention of corporate entities, only human beings and their government.

For 120 years, it was not Congress but the Supreme Court that expanded the definition of "persons" to include for-profit corporations for the purposes of applying constitutional protections. For 30 years, the court has granted First Amendment speech protections to corporations as "artificial persons."

But not until last month has the court declared that the First Amendment gives corporations the right to spend unlimited money to influence elections. The court majority, self-styled believers in precedent and judicial restraint, overturned two major Supreme Court decisions and reversed decades of campaign-finance laws aimed at preventing corporations from having undue influence over local, state and national elections.

Granted, existing campaign-finance rules have been inadequate. Regular news reports document how corporate spending debases elections and elected officials. But that doesn't mean things can't get worse. The court has challenged whatever social mores are left that view no-holds-barred corporate cash register politics as unseemly.

The disparities between individual contributions and available corporate dollars mock any pretense of equal justice under the law. A total of $5.2 billion from all sources was spent in the 2008 federal election cycle (which includes 2007 and 2008), according to the Center for Responsive Politics. For the same two-year period, ExxonMobil's profits were $85 billion. The top-selling drug, Pfizer's Lipitor, grossed $27 billion in sales during that time.

Such disparities invite corporations to spend whatever they believe necessary to further entrench the corporate state. The money they now spend will be used to reward friends and punish opponents.

Corporations know that money makes a big difference when it comes to blocking protections for workers, consumers and the environment. Wall Street, health insurance and drug companies, fossil fuel and nuclear power companies, and defense corporations have been hard at work defeating common-sense reforms that would make them more accountable.

Do we want more elected officials to believe that to challenge corporate agendas is to risk their career?

There is every reason to expect that there will be much more direct corporate electoral funding in the wake of Citizens United. Funneled without limit through trade associations and shadowy front groups able to run vicious attack ads without identifying their corporate patrons, such lucre will deter good candidates from running for office because they won't want to have anything to do with such dirty politics.

What can be done about this accelerating drift into the muck?

In the absence of a future court overturning Citizens United, the fundamental response should be a constitutional amendment. We must exclude all commercial corporations and other artificial commercial entities from participating in political activities. Such constitutional rights should be reserved for real people, including, of course, company employees, to enhance a government of, by and for the people.

Corporations are not humans. They do not vote. They should not be accorded a constitutional right to influence elections or public policies, especially given their enormous embedded privileges and immunities compared to real people.

While the arduous amendment process is underway, the progressive response to Citizens United rests with several legislative and administrative initiatives.

First, the Fair Elections Now Act in the House and Senate would provide candidates a base of funding to run viable campaigns without being indentured to corporate money. But these bills would not prevent corporations from overwhelming the public funding.

Second, a strong shareholder-protection policy should limit corporate political spending. This would require executives to get support from an absolute majority of their shareholders before spending any money on politics.

Third, as the nation's largest customer, the government could refuse, by statute or executive order, to contract with or provide subsidies, handouts and bailouts to any company that spends money directly in the electoral arena. This would help avoid corruption. No longer would Citigroup or General Motors, which were saved by taxpayers and are wards of Washington, be able to lobby as if they were stalwarts of sink-or-swim free enterprise.

As Justice John Paul Stevens, writing for the minority in Citizens United, demonstrated, the Framers did not intend for the First Amendment to confer protections on businesses beyond freedom of the press. The robust guarantees of the First Amendment are vital for real, live human beings, to ensure their expressive and democratic participative rights are protected. There can be no level playing field between the giant multinational corporations and individual citizens without such differential rights.

It is worth recalling that representative democracy is rule by the people. Corporations, first chartered into existence over 200 years ago by the states, were meant to be our servants, not our masters. Especially in the aftermath of Citizens United, it is time to right this relationship.

Copyright ©2010 Dow Jones & Company, Inc.

Polls on Citizens United and Limiting Corporate Speech

About a week and a half ago I heard a news report stating that the majority of Americans agree with the Supreme Court ruling in Citizens United. When I looked at the actual Gallup Poll numbers, a different picture emerged.

A careful reading though, reveals that while 57% agreed that "campaign money given to political candidates" is a form of protected free speech, a whopping 76% think the government "should be able to limit the amount corporations and unions can give."

The Roper Center also reports that a FOX News poll found "that voters disapproving of the decision 53-27."

The Baseline Scenario
What happened to the global economy and what we can do about it

President Obama On CEO Compensation At Too Big To Fail Banks
with 80 comments

Bloomberg today reports President Obama as commenting on the $17 million bonus for Jamie Dimon of JP Morgan Chase and the $9 million bonus for Lloyd Blankfein of Goldman Sachs,

“I know both those guys; they are very savvy businessmen,”


““I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.” [Emphasis Added]

Taken separately, these statements are undeniably true. But put them together in the context of the Bloomberg story – we have to wait until Friday for the full text of the interview – and the White House has a major public relations disaster on its hands.

Does the president truly not understand that Dimon and Blankfein run banks that are regarded by policymakers and hence by credit markets as “too big to fail”?

This is the antithesis of a free-market system.
[Emphasis Added] Not only were their banks saved by government action in 2008-09 but the overly generous nature of this bailout (details here) means that the playing field is now massively tilted in favor of these banks. (I put this to Gerry Corrigan of Goldman and Barry Zubrow of JP Morgan when we appeared before the Senate Banking Committee last week; there was no effective rejoinder.)

Not only that, but the incentives for the people running these megabanks is now to take on reckless amounts of risk. They get the upside (for example, in these compensation packages) and – when the downside materializes – this belongs to taxpayers and everyone who loses a job. (See my testimony to the Senate Budget Committee yesterday; there was no disagreement among the witnesses or even across the aisle between Senators on this point.)

Being nice to the biggest banks will not save the midterm elections for the Democrats. The banks’ campaign contributions will flow increasingly to the Republicans and against any Democrats (and there are precious few) who have fought for real reform.

The president’s only political chance is to take on the too big to fail banks directly and clearly. He needs to explain where they came from (answer: the Reagan Revolution, gone wrong), how the problem became much worse during the last administration, and how – in credible detail – he will end their reign.

What we have now is not a free market. It is rather one of the most complete (and awful) instances ever of savvy businessmen capturing a state and the minds of the people who run it. Is this really what the president seeks to endorse?

By Simon Johnson

FEBRUARY 10, 2010, 10:59 AM
Obama Clueless

Paul Krugman

I’m with Simon Johnson here: how is it possible, at this late date, for Obama to be this clueless?

The lead story on Bloomberg right now contains excerpts from an interview with Business Week which tells us:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.

Oh. My. God.

First of all, to my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses.

And more specifically, not only has the financial industry has been bailed out with taxpayer commitments; it continues to rely on a taxpayer backstop for its stability. Don’t take it from me, take it from the rating agencies:

Copyright 2010 The New York Times Company