Archive for the ‘Government’ Category

What the election won’t change

October 26, 2016

A Deep State of Mind: America’s Shadow Government and Its Silent Coup by John W. Whitehead for Counterpunch.

Clinton’s team has lobbyists for Russian bank

April 8, 2016

Hillary Clinton’s campaign team includes John and Tony Podesta, lobbyists for Sberbank, Russia’s largest financial institution.

Hillary Clinton and John Podesta

Hillary Clinton and John Podesta

John Podesta, the chair of the Clinton campaign, and his brother Tony, a bundler of Clinton campaign contributions, are the founders and heads of the Podesta Group, one of Washington D.C.’s top lobbying firms.  They registered the firm at a lobbyist for Sberbank, as required by law, at the end of March.

This was reported in an article in the Observer, an on-line news service.  A Sberbank affiliate, Troika Dialog Group, is mentioned in the Panama Papers leak.

Sberbank isn’t the Podestas’ only foreign client.  During the past 10 years, the brothers have lobbied on behalf of Saudi Arabia, Iraq, Myanmar (Burma), Qatar, Somalia, Azerbaijan, Egypt, Kenya, Ukraine and Vietnam.

Of course the Podesta Group has plenty of domestic clients as well, and it isn’t unusual for a K-Street lobbying firm to have foreign clients.  Hiring lobbyists is what both citizens and foreigners think they have to do to be heard in Washington.

72 DHS employees are on the terrorist watch list

February 10, 2016

At least 72 employees at the Department of Homeland Security are listed on the U.S. terrorist watch list, according to a Democratic lawmaker.

Rep. Stephen Lynch (D., Mass.) disclosed that a congressional investigation recently found that at least 72 people working at DHS also “were on the terrorist watch list.”

“Back in August, we did an investigation—the inspector general did—of the Department of Homeland Security, and they had 72 individuals that were on the terrorist watch list that were actually working at the Department of Homeland Security,” Lynch told Boston Public Radio.

Source: Washington Free Beacon

As Peter Van Buren remarked, this means that either the terrorist watch list is bogus, or Homeland Security has a bad internal security problem, or possibly both.

This isn’t the only problem with Homeland Security.  In a recent covert security check, attempts to smuggle firearms on board airplanes were 95 percent successful.

I think that part of the problem is the enormous and thoughtless expansion of Homeland Security right after the 9/11 attacks and since.

In counter-terrorism, as in any other field, there is a limited number of people who know that they’re doing.  This is not necessarily a problem, as long as the loyal, hard-working, mediocre people are guided by the real experts.

But employment in Homeland Security was ramped up just on general principles before anybody had a clear idea what these employees were to be used for.  I think experienced counter-terrorism specialists were swamped.

The Washington Post ran a series of articles in 2010 on Top Secret America that showed that secret surveillance and intelligence agencies were proliferating at such a rate that nobody had a handle on how many there were or what their missions were.   I’ve read nothing to indicate that things have changed since then.

What a President could do without Congress

February 9, 2016

 American Presidents are not helpless in the face of opposition from Congress.

A sitting President has the power to do many good things on his own authority.

For example:

  • Enforce the laws against financial fraud.
  • Enforce the anti-trust laws.
  • Enforce current labor, environmental and consumer protection law.
  • Refrain from signing trade agreements that hurt American workers and infringe on American national sovereignty.
  • Start renegotiating existing trade treaties.
  • Refrain from acts of war, including bombing, drone strikes and funding of foreign warlords, against countries on which Congress has not declared war.
  • Classify only information that is vital to national security.
  • Refrain from prosecuting whistle-blowers for exposing wrongdoing.

Simply carrying out the Constitutional duties of the President, and refraining from going beyond those duties, would be an improvement over what we have now.


Mike Lofgren and the Deep State

January 30, 2016

This Bill Moyers broadcast is from 2014

Mike Lofgren is a Washington insider.  He was a Republican congressional staff member for 28 years, including 16 years as a senior analyst on the House and Senate budget committees.

DeepState51cdQwM-Z8LHe has written a book, THE DEEP STATE: The Fall of the Constitution and the Rise of a Shadow Government, about governmental and private institutions that operate above the law, and independently of the will of the citizens, and how they interlock in ways that mutually reinforce their power.

The Deep State includes the bankers who were prosecuted for financial fraud because they were “too big to fail” and CIA torturers who were not prosecuted or dismissed because that would demoralize the agency.

It is the force that makes the government engage in bank bailouts, warrant-less surveillance and undeclared wars.  It is the force that has made the American public accept endless war and economic stagnation as normal.  It is the explanation of why partisan gridlock and financial sequesters never affect the availability of money to subsidize foreign military forces.

Lofgren’s Deep State includes President Eisenhower’s “military industrial complex”, the FBI, CIA and NSA and their supposed overseers in Congress and the federal courts, Wall Street and its supposed overseers in the Treasury and Justice departments, and Silicon Valley.

They work together, and have revolving doors through which people can move from one to another—for example, General David Petreaus, after his retirement from the military, to a seven-figure job at KKR, a Wall Street private equity form.

None of this is the result of a conscious conspiracy, Lofgren wrote.  It is a natural evolution of power without accountability, and the “group-think” of people who never have their assumptions questioned.


The weak and helpless yet imperial Presidency

January 22, 2016

I’m reading THE DEEP STATE:  The Fall of the Constitution and the Rise of a Shadow Government by Mike Lofgren, a veteran Republican congressional staff member.   He wrote the following on pages 32-33:

DeepState51cdQwM-Z8LOther than the two-year period after his inauguration, when Democrats held both the House and the Senate, President Obama has not been able to enact most of his domestic policies and budgets.  Because on incessant GOP filibustering, not only could he not fill numerous vacancies on the federal judiciary, he could not even get some of his most innocuous presidential appointees into office.  Democrats controlling the Senate during the 113th Congress responded by weakening the filibuster, but Republicans inevitably retaliated with other parliamentary delaying tactics.

Despite this apparent impotence—and defenders of the President are quick to proclaim his powerlessness in the face of ferocious Republican obstruction—President Obama can liquidate American citizens without due process, detain prisoners indefinitely without charge, conduct “dragnet” surveillance on the American people without judicial warrant and engage in unprecedented—at least since the McCarthy era—witch-hunts against federal employees through the so-called Insider Threat Program.

Within the United States, we are confronted with massive displays of intimidating force by militarized federal, state and local law enforcement.

Abroad, President Obama can start wars at will and engage in virtually any other activity without so much as a by-your-leave from Congress, including the forced landing of a plane carrying a sovereign head of state over foreign territory.


Sauce for the goose: the 41-vote rule

September 9, 2015

I strongly criticized the 41-vote rule in the Senate when the Republican minority used it to block legislation and appointments proposed by President Obama.

imbalanceNow Democrats are using the same rule to prevent the Republican majority from disapproving the Iran nuclear inspection deal negotiated by President Obama and other world leaders with the Iranian government.

I am glad of the result, but I still think it is a bad rule.

The rule allows Senators to use a kind of virtual filibuster to block Senate action, which can be over-ridden only by a vote of 60 Senators.  It is not part of the Constitution.  It is not a law.  It is a rule of the Senate itself.

The United States already has more checks and balances than any other contemporary democracy.  Laws, appropriations and taxes require approval of a House of Representatives elected by popular vote, a Senate elected on the basis of state sovereignty and a President elected by a hybrid system through the Electoral College.

Even then, the Supreme Court, which is appointed not elected, can overrule decisions by the President and Congress.

I don’t think the United States needs more checks and balances than are provided for in the Constitution.


Pentagon spending out of control

August 22, 2015
What $8.5 trillion looks like

What $8.5 trillion looks like

My friend Mike Connelly e-mailed me a link to an article on the Antimedia web site pointing out the lack of auditing or spending controls by the Pentagon, along with a helpful graphic showing just how much the Department of Defense has spent since 1996.

The article was based on a three-part series in Reuters news service in 2013 about how nobody knew exactly how much money was being spent or for what, and the general lack of financial control.

As one example, Scot Paltrow quoted Admiral Mark Harnicheck, head of the Defense Logistics Agency, as saying “we have about $14 billion in inventory for various reasons, and probably half of that is in excess of what me need.”   Note the “probably.”  He didn’t really know

The Reuters articles reminded me of a similar series in the Washington Post in 2010 reporting the same situation in regard to secret intelligence and national security agencies.  There, too, nobody knew the extent of what was being done, how much was being spent or whether it was effective.

Claire Bernish, author of the Antimedia article, was rightly concerned about money being wasted being wasted on the military that could be better spent on other national priorities or left in the pockets of American taxpayers.

I have another concern.  Just how effective can the U.S. armed forces be if the Secretary of Defense can’t set priorities or know just what the department’s budget is being spent for?


Reflections on Deep State America

July 30, 2015

“Thoreau” on Unqualified Offerings called attention to an article by Philip Giraldi in The American Conservative about a favorite topic of mine—the Deep Statethe hidden government that seems to operate no matter who wins the elections.

Consider for a moment how Washington operates.  There is gridlock in Congress and the legislature opposes nearly everything that the White House supports. 

quibvulturecitizenrydeepstateNevertheless, certain things happen seemingly without any discussion: Banks are bailed out and corporate interests are protected by law.  Huge multi-year defense contracts are approved.  Citizens are assassinated by drones, the public is routinely surveilled, people are imprisoned without being charged, military action against “rogue” regimes is authorized, and whistle-blowers are punished with prison.  The war crimes committed by U.S. troops and contractors on far-flung battlefields, as well as torture and rendition, are rarely investigated and punishment of any kind is rare.

America, the warlike predatory capitalist, might be considered a virtual definition of deep state.

via The American Conservative.

In many countries of Latin America and the Middle East, it is obvious that ultimate power rests with the military, working with an oligarchy of wealth.   Turkey is a good example, Giraldi wrote.  Such an alliance also exists in the United States.

America’s deep state is completely corrupt: it exists to sell out the public interest, and includes both major political parties as well as government officials.

1olPoliticians like the Clintons who leave the White House “broke” and accumulate $100 million in a few years exemplify how it rewards.   A bloated Pentagon churns out hundreds of unneeded flag officers who receive munificent pensions and benefits for the rest of their lives.

And no one is punished, ever. 

Disgraced former general and CIA Director David Petraeus is now a partner at the KKR private equity firm, even though he knows nothing about financial services.  More recently, former Acting CIA Director Michael Morell has become a Senior Counselor at Beacon Global Strategies.  Both are being rewarded for their loyalty to the system and for providing current access to their replacements in government.

What makes the deep state so successful? It wins no matter who is in power, by creating bipartisan-supported money pits within the system. 

Monetizing the completely unnecessary and hideously expensive global war on terror benefits the senior government officials, beltway industries, and financial services that feed off it. 

Because it is essential to keep the money flowing, the deep state persists in promoting policies that make no sense, to include the un-winnable wars currently enjoying marquee status in Iraq/Syria and Afghanistan.

via The American Conservative.

It will take more than a few individuals winning a few elections to root out this system.  It would take a strong and committed mass movement, embracing a majority of the American people, and astute leaders working over a long period of time.

I think it’s unlikely that the United States faces a danger of a military coup as in the movie “Seven Days in May” or in Chile in real life in 1973.  But there are other ways to topple an elected government.  The financial and national security elite have the power to create crises which the public will turn to them, and not the elected politicians, to solve.

Kevin Drum on the purpose of democracy

July 3, 2015


When people tell me “this is a Republic, not a democracy,” my first question is who they think is entitled to rule over them.

I like the following observation by Kevin Drum of Mother Jones:

It’s true that humans are hairless primates who naturally gravitate to a hierarchical society, but there’s little evidence that “most humans” prefer non-democratic societies.  There’s loads of evidence that powerful elites prefer elite-driven societies, and have gone to great lengths throughout history to maintain them against the masses. Whether the masses themselves ever thought this was a good arrangement is pretty much impossible to say.

Of course, once the technologies of communication, transportation, and weaponry became cheaper and more democratized, it turned out the masses were surprisingly hostile to elite rule and weren’t afraid to show it.  So perhaps it’s not so impossible to say after all.

In fact, most humans throughout history probably haven’t favored “meritocratic” rule, but mostly had no practical way to show it except in small, usually failed rebellions.  The Industrial Revolution changed all that, and suddenly the toiling masses had the technology to make a decent showing against their overlords.  Given a real option, it turned out they nearly all preferred some form of democracy after all.

Which brings us to the real purpose of democracy: to rein in the rich and powerful.  Without democracy, societies very quickly turn into the Stanford Prison Experiment.  With it, that mostly doesn’t happen. 

That’s a huge benefit, even without counting free speech, fair trials, and all the other gewgaws of democracy. It is, so far, the only known social construct that reliably keeps powerful elites from becoming complete jackasses.  That’s pretty handy.

via Mother Jones.

The stupidity theory of organizations

June 13, 2015

This was originally posted on April 30, 2013.


Stupidity in big organizations is not a bug. It’s a feature. So say two scholars, Mats Alvesson of Lund University in Sweden and Andre Spicer of City University in England, in their recent paper, The Stupidity Factor in Organizations.

They say organizations need “functional stupidity,” which is a willful lack of recognition of the incompleteness of knowledge and a willful refusal to question the organization’s goals and policies. This builds confidence and loyalty which helps the organization to function smoothly.

Alvesson and Spicer discuss how managers use vision statements, motivational meetings and corporate culture as “stupidity management” to develop loyalty and suppress critical thinking. They discuss how employees use “stupidity self-management” to suppress doubt and get with the program.

In Herman Wouk’s novel, The Caine Mutiny, a recruit decides that the U.S. Navy is an organization designed by geniuses to be operated by idiots. When in doubt, he asks himself, “What would I do if I were a idiot?” That is a gross exaggeration, but an exaggeration of truth.

Managers want employees who are intelligent enough to carry out orders competently, but not so intelligent that they question the orders. Critical thinking creates friction that prevents the organization from running smoothly. Over time the organization’s tendency is eliminate that friction, and become more disconnected from reality.

You can see this in how Washington officials and journalists understand public policy. They treat the processes of government, such as the 60-vote rule in the Senate or the revolving door between corporate and government employment, as if they were objective and unchangeable facts, like the laws of thermodynamics. They treat actual problems, such as unemployment or global climate change, as if they were matters of personal preference.

The trouble with ignoring reality is that sooner or later it catches up with you. Then crisis generates what Alvesson and Spicer call the “How could I have been so stupid?” syndrome.

Click on A Stupidity Based Theory of Organizations for a PDF of Alvesson’s and Spicer’s paper. If you read it with close attention, I think you will see the dry humor beneath their social science jargon.

Click on Understanding Organizational Stupidity for Dmitry Orlov’s summary of their paper and his comments.


Public servants and hidden agendas

April 23, 2015

Public choice theory is the application of economic theory to political science.  It is about how government bureaucracies, which are created to serve a public purpose, change over time so that they serve the interests of the bureaucrats rather than the public.

This is something that in fact does happen, and it is a big problem.  But it is not unique to government.  It applies to armies, college faculties, priesthoods, labor unions, corporate management and any other kind of big organization, public or private.

It is possible to pass laws and regulations against corruption, but these laws and regulations will be ineffective unless most people have a moral compass that is backed up by public opinion.

A market economy is a good mechanism but it does not provide a moral foundation for society.  Future executives are taught in Economics 101 that they have no responsibility to society at large but only to their stockholders and that the impersonal workings of the free market will make everything come out all right.

But if the free market makes everything come out all right, why should they even bother about the stockholders?  Why should they not do what’s in their own self-interest regardless of the stockholders?

U.S. weapons go AWOL

March 27, 2015

Since 2007, the U.S. government has been sending sending military supplies to Yemen to help the government fight a rebellion there.   The Yemen government is collapsing, and the U.S. government has lost track of some of those supplies, including these.

U.S.-military-hardware-AWOL-in-Yemen-The-Washington-PostAs Peter Van Buren asked, how do you misplace a patrol boat?


Our dying American democracy

March 23, 2015

Is the United States still a democracy?  Tom Engelhardt pointed out how the USA is evolving into something different.

1.  1% ElectionsPresidential election campaigns no longer begin with the Iowa caucuses and the New Hampshire primaries.   They begin with presidential candidates being screened by wealthy donors who determine which of them will have the wherewithal to run.

2.  The Privatization of the State (or the U.S. as a Prospective Third World Country).   “Crony capitalism” was a word that we Americans coined to describe the system in poor countries in Asia, Africa and Latin America.  But now our own country public services are being handed over to well-connected individuals to be operated for private profit.

3.  The De-Legitimization of Congress and the PresidencyThe democratic branches of government are held in low esteem, and with reason.   Recent Presidents and congressional leaders have abdicated their Constitutional responsibilities.

4.  The Rise of the National Security State as the Fourth Branch of Government.  Secret branches of government decide national policy and expand their own powers without authorization of law.  People who reveal what they’re doing are subject to prosecution.

5.  The Demobilization of the American People.   Most Americans recognize that their government doesn’t really represent them.  But unlike in earlier eras, this discontent has not produced any mass movement to do something about it—at least not yet.


The New American Order: the 1% Elections, the Privatization of the State, a Fourth Branch of Government and the Demobilization of “We the People” by Tom Engelhardt for TomDispatch (via the Unz Review).   A powerful and accurate indictment.   My summary doesn’t do it justice.  I recommend you read the whole thing.


In 2015, expect civil unrest, disaffected police

January 1, 2015

The astute John Michael Greer, whose Archdruid Report is one of my favorite blogs, predicted that the most important trends in 2015 will be the disaffection of America’s police combined with continuing civil unrest.

He said the morale of American police is at the same state as that of the American forces in Vietnam in the 1970s.  Police feel they’ve been sent into a war they can’t win, and abandoned by the civilian authority that’s nominally their superior.

I think there’s truth to that, although it’s exaggerated.  Rank-and-file police officers did not invent the “broken windows” theory of policing, which is that the way to ensure civil order is to punish every violation, no matter how minor.  Nor are they the ones who decided that the way to finance municipal government in places such as Ferguson, Missouri, is to collect traffic fines from poor people.

civil-unrest-2016Revolutions generally occur when the police and the military cease to be willing to defend existing authority against rebels.

I think there is zero chance that the military or police would go over to the side of rioting black people or even peacefully protesting black people.  Armed resistance is not a feasible option for African-Americans in the present-day USA.

Effective resistance to civil authority, as I see it, would come from armed and organized militias, such as the group that formed around rancher Cliven Bundy in his fight with the federal government over grazing fees.   They defied federal and local police with loaded weapons, and were not met with deadly force.

I believe there is a real possibility that, as the U.S. economic plight worsens, resistance to government could grow and, as military and police morale decline, resistance to government would be tolerated until it became a real threat.

If things continue as they are in the United States, I believe there is bound to be an explosion.  And, given the history of violent revolution, I do not expect anything good to come from such an explosion.


Here is John Michael Greer in his own words:


Civil authority, the CIA and two scary thoughts

December 26, 2014

The basic principle of constitutional government is that any government agency or official authorized to use lethal force is subject to legitimate civilian authority.

Governments, according to the U.S. Declaration of Independence, are instituted so that people may enjoy their alienable right to life, liberty and the pursuit of happiness, and they derive their just powers from the consent of the governed.


Click to enlarge.

If the police, the military or secret intelligence agencies become laws unto themselves, then they become the government, and so-called American freedom and democracy becomes a sham.

The greatness of George Washington was that he always followed the directives of the Continental Congress, however misguided he may have thought them to be, and that, after the success of the Revolution, he refused the temptation to make himself dictator and retired to Mount Vernon until called to public service by the people.

Washington’s decision, and the precedent he set, saved the infant USA from the fate of the new Latin American republics, whose military forces regard themselves as the ultimate authority and who think they have a right and duty to step in when the civilian authority falters.

Then there was Germany in 1919-1933, prior to the rise of Hitler, when the German General Staff set its own foreign and military policy in disregard of the elected government, which did not dare to challenge it.

Our Pentagon and CIA have come to be political forces in their own right, not defying the elected government but letting it be known that their views are not necessarily the views of the elected government.

John Brennan, the head of the CIA, openly disagrees with President Obama’s condemnation of torture, and the President has not reprimanded him.  Neither has he tried to dismiss torturers from government service.  He appears to argue with his appointment, but not to exercise his authority as commander-in-chief.

Why not?  One likely possibility is that the President is not sincere in his condemnation.  Another is that he does not believe the public would support him.

A Gallup poll indicates that the American public has more confidence in the military than in any other American institution, and less confidence in Congress than any other instituion.  Twice as many have confidence in the military than in the presidency.   It’s a bad sign for a democracy when the public has more confidence in the military than in the civilians it elected.

Here’s a scary thought.

Maybe the President fears that if he ordered the CIA to operate within the Constitution and the law, it would not obey.

Here’s a scarier thought.

Maybe the President already has ordered the CIA to operate within the Constitution and the law, and it did not obey.


Citi’s open door in Washington

December 18, 2014


Senator Elizabeth Warren recently complained about Citigroup’s influence on the congressional budget and legislative process.   This chart from the Washington Post shows Citi has a strong voice in the executive branch as well.  So do Goldman Sachs and other big Wall Street firms.

Presidential powers and Constitutional limits

December 1, 2014

mehta-datalab-executiveorders1Hat tip for the chart to David Damico.

President Obama is accused by Republicans of exceeding his Constitutional authority by issuing an executive order to allow up to 5 million unauthorized immigrants who meet certain conditions to stay in this country.

An executive order is simply a directive by a President to federal departments or the armed forces to follow a policy.

With the increase in the size and scope of the federal government, executive orders become more and more necessary to make the government work.  But so does the need for checks and balances to prevent abuse of executive power.

The Constitutional authority to issue executive orders comes from provisions vesting the “executive power” of the U.S. government in the President, making the President commander-in-chief of the armed forces and ordering the President to make sure that the laws be faithfully executed.

The most far-reaching executive order in American history was the Emancipation Proclamation.   President Lincoln claimed power as commander-in-chief to order the confiscation of property of the enemy.

President Franklin D. Roosevelt issued more executive orders than any other President.  On the day he was inaugurated, he ordered the temporary closing of American banks.  Another executive order was to forbid American citizens to hoard gold coins or bullion.  FDR’s most infamous executive order was the internment of Japanese-American citizens during World War Two.


Obama-GOP compromise? I hope not

November 14, 2014

All ways in which President Obama and Republicans in Congress could reach agreement are bad for the American people.

All of President Obama’s initiatives that are good for the American people are unacceptable to the Republicans.

Bad for Americans, acceptable to Republicans

Pro-Business Trade Treaties

free-tradePresident Obama has pushed for new trade treaties that give foreign corporations the right to appeal for damages if countries pass laws that unjustly deprive them of profits.  Similar provisions in existing trade treaties have been used against environmental regulation, subsidies for renewable energy and financial regulation.  Proposed new treaties are believed to go further.

The proposed Trans Pacific Partnership agreement appears doomed, but the Trans Atlantic Free Trade Agreement (aka the Transatlantic Trade and Investment Partnership) and the Trade in Services Agreement might sneak in under the public’s radar.   Corporate American favors these treaties, so the GOP might go for them.

Weakening Social Security and Medicare

obama_cutsPresident Obama repeatedly proposed changing the formula for Social Security benefits and raising the age for Medicare, in exchange for modest tax increases on upper income brackets.  Even though the tax increases are off the table, Republicans might go for such a “grand bargain” on other issues.

Starting New Wars

Obama-and-DronesIf President Obama discovers some new threat that he says requires military intervention in a foreign country, the Republicans in Congress are sure to support him—short of actually voting authorization, which he says he doesn’t need anyway.  Likewise for new authority for surveillance, preventive detention, drone strikes, prosecution of whistle-blowers, etc.

Tar Sands Pipeline  [Added 11/15/14].

The Canadian government and Trans Canada corporation want to bring corrosive tar sands bitumen from northern Alberta to oil refineries in the United States.  Republicans in Congress are strongly in favor of this.  President Obama’s stand on the Keystone XL pipeline is uncertain, but federal regulators have already quietly approved the alternative Alberta Clipper pipeline.  Overall the President is a strong promoter of energy development, including hydraulic fracturing for natural gas.

Good for Americans, unacceptable to Republicans

Climate Change

waronglobalwarming63-300x0President Obama says that he wants laws and regulations that limit the greenhouse gas emissions that contribute to global warming.  A larger segment of the Republicans deny that human-caused climate change is even taking place, let alone that something should be done about it.

Immigration Reform

The only feasible immigration reform, as I see it, is some provision providing a path to citizenship for the millions of unauthorized immigrants already in this country.  I admit this is not good, but the alternatives are worse.


Funding government by court settlements

August 28, 2014

State governments in the USA get increasing amounts of revenue from court settlements from corporations accused of wrongdoing.  As The Economist reported, these settlements amount to big money.

So far this year, Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and other banks have coughed up close to $50 billion for supposedly misleading investors in mortgage-backed bonds.  BNP Paribas is paying $9 billion over breaches of American sanctions against Sudan and Iran.  Credit Suisse, UBS, Barclays and others have settled for billions more, over various accusations.

Structured-SettlementsAnd that is just the financial institutions.  Add BP’s $13 billion settlement over the Deepwater Horizon oil spill, Toyota’s $1.2 billion settlement over alleged faults in some cars, and many more.  [snip]

Rhode Island’s bureaucrats have been on a spending spree courtesy of a $500 million payout by Google, while New York’s governor and attorney-general have squabbled over a $613 million settlement from JPMorgan.  [snip]

Andrew Cuomo, the governor of New York, who is up for re-election, reportedly intervened to increase the state coffers’ share of BNP’s settlement by $1 billion, threatening to wield his powers to withdraw the French bank’s license to operate on Wall Street.  Why a state government should get any share at all of a French firm’s fine for defying the federal government’s foreign policy is not clear.

There are two ways of looking at this.  One is that federal prosecutors and state governments are shaking down corporations for minor offenses, much as local police and courts in communities such as Ferguson, Missouri, shake down residents for minor traffic offenses.  The other is that corporate officers are buying their way out of individual criminal liability at stockholders’ expense.

I think the second alternative is the more common, while The Economist writer apparently disagrees.  Whichever is the case, as state government becomes more dependent on corporate settlements for revenue, the more demand there will be for windfalls from future settlements.   If shakedowns aren’t common now, they will become so.  There is no good alternative to paying normal expenses of government through taxes.

The Economist’s writer is right to say that the big problem with these settlements is that they are made in secret.  Nobody knows the evidence against the corporations, and nobody knows what, if anything, they admitted to doing.

Senators Elizabeth Warren and Tom Coburn have proposed a bill that would require the terms of the settlement to be made public, and for the prosecutors and regulators to write explanations of why the cases did not go to trial.   That would be a good start.


Why so much military equipment to give away?

August 20, 2014

Why is it that the U.S. Department of Defense has so much surplus military equipment?  So much that they have no better use for it than to give it away to local police departments?

It is hard to believe that there have been so many radical improvements in armored personnel carriers, sniperscopes and the like that the old armored personnel carriers and sniperscopes have become obsolete.

Could it be that the DOD has a problem with its procurement process?  Could it be that DOD bureaucrats regularly order more equipment than they need in order to maintain their shares of the DOD budget?

I think the armed forces should be well-armed and well-equipped, but if they have more equipment than they know what to do with, then that is a problem.


The things that President Obama could do

August 18, 2014

butwewon'tThe excuse given by supporters of President Obama is that he is stymied by the Republican control of the House of Representatives and by Republican obstructionism in the Senate.   It is true that the congressional Republicans are determined to block the President’s programs by any legal means necessary.

But as Thomas Frank pointed out in his latest Salon article, there are many things the President could do on his own authority that would be both popular and beneficial to the nation.  They are:

Frank noted that Obama also could tell the Federal Communications Commission that Net Neutrality is the policy of his administrationHe could reclassify marijuana so that it is no longer a Class I narcoticHe could reform the federal contracting system so as to discourage outsourcing and promote good labor practicesHe could encourage whistle-blowers instead of punishing them.

So why doesn’t the President do any of these things?  It can’t be because he is worried about corporate donations for his next campaign.  He is not eligible to run again, so that is not a factor.

I see three possible explanations.  The most likely is that he genuinely believes in what he is doing.  My guess is that he thinks that the status quo, with some minor modifications to file off sharp edges, is the best that is possible in today’s world.

Another possibility is that he doesn’t want to do anything to jeopardize the kind of lucrative post-Presidential career that Bill Clinton enjoys.  And the third, which I think highly improbable, is that he is afraid, that the powers-that-be know some guilty secret or have some sort of leverage on him.


The American empire and its colonies

July 8, 2014

The United States of America consists of more than just 50 states.   This video describes the complex web of US colonies, territories and dependencies, all subject to taxation without representation.

If I were a citizen of Puerto Rico or Guam, I don’t think I would want to declare independence from the USA, and I don’t expect the inhabitants of these dependencies to do so.  But in the unlikely event that this happened, I would not advocate putting down the rebellion by means of armed force.

Hat tip for the video to Jack Clontz and his friend Marty.

Muzzled watchdogs: the IRS and the SEC

July 3, 2014


About $385 billion in U.S. taxes goes unpaid every years, according to the Internal Revenue Service.   That’s equal to about 11 percent of the federal budget.

The IRS ought to have enough enforcement staff to collect that money, but the opposite is happening.   The IRS budget is down 14 percent since fiscal 2010, and it has 11 percent fewer employees.  Staff specifically assigned to enforcement is down 15 percent.

President Obama proposes a modest increase in budget and staff, but not enough to get the IRS back up to 2010 levels.  Republicans in the House of Representatives want to cut the budget even more.   Meanwhile the IRS has important new responsibilities—administering the tax credit provisions of the Affordable Care Act, and implementing the Foreign Account Tax Compliance Act, which is intended to stop tax evasion in foreign tax havens.

I don’t like paying taxes, and probably you don’t either.  But I pay what I owe.  If others don’t pay what they owe, then either people like me have to make up the difference or the amount is put on the national credit card for future generations to pay.

The U.S. Securities and Exchange Commission is another muzzled government watchdog.  It never has exercised its authority to require corporations to reveal political contributions, as part of their required disclosure to investors.  Mary Jo White, a Democrat who chairs the SEC, never put this on the agenda.

Last week the Republican-controlled House Appropriations Committee reported out the annual SEC budget.  One provision of the bill bars the SEC from making a political disclosure requirement.   So a way to monitor corporate power is being shut off before most Americans realize it exists.


Why the GOP really wants to de-fund IRS by Jared Bernstein for The Washington Post.

Why is Washington still protecting the secret political power of corporations? by Alexis Goldstein for The Guardian.


The passing scene: Links & comments 6/26/14

June 26, 2014

The World’s Most Important Spectator by David Bromwich for the London Review of Books.  Hat tip to Naked Capitalism.

Obama roots for the good cause but often ends up endorsing the acceptable evil on which the political class or the satisfied classes in society have agreed.  He watches the world as its most important spectator.

This is an excellent account not only of President Obama’s second term, but the current American political scene.  Strongly recommended.

Obama’s ‘drone memo’ is finally public.  Now show us the library of secret law by Jameel Jaffer for The Guardian.  Hat tip to Naked Capitalism.

 The philosopher Hannah Arendt wrote that one of the defining characteristics of a totalitarian government is that it has secret laws.   The Obama administration claims authority to wage war and issue death warrants based on secret legal rulings.

The American Civil Liberties Union and the New York Times forced the administration to release the 41-page legal memo that justified the killing of Anwar al-Alwiki, an anti-American U.S. citizen, in Yemen.   The first 11 pages, listing what al-Alwiki was accused of doing, are blacked out, all the footnotes are blacked out, and many other references throughout the memo also are blacked out.

What this indicates is that there are other secret legal memos claiming who-knows-what powers for the President.   The administration’s lawyers decide what powers President Obama has, and the rest of us are not allowed to know, let alone dispute, what these powers are.

Cross-national intelligence and national democracy by Henry Farrell for Crooked Timber.  Hat tip to Marginal Revolution.

International cooperation between secret intelligence agencies puts them beyond the reach of their national governments.   It may be illegal for the National Security Agency to spy on Americans and General Communications Headquarters to spy on Britons, but there is nothing to prevent the NSA from spying on Britons and the GCHQ from spying on Americans, and passing the information along.

A Secret Plan to Shut Down Social Security Offices and Outsource Its Work by Richard Eskow of Campaign for America’s Future.

Social Security offices, like post offices, are located on prime real estate.   There are big profits to be made by someone if this real estate is sold off at bargain prices.  And also profits to be made in replacing civil servants with contractual on-line services.

I have no way of knowing whether this is what the Social Security administration has in mind, but I do know that shutting down offices will in no way benefit senior citizens.

To the Woman Behind Me in Line at the Grocery Store by Andrea Gardner for The Blog.  Hat tip to Rod Dreher.

Never pass up an opportunity to perform an act of kindness.