Will The Establishment's Culture Of Corruption Defeat The #GreenNewDeal?

Everybody does it... except those who don't. Yesterday PhilosophRob, a vegetarian, ran two Open Secrets-based lists of how much money some of the presidential candidates in Congress took from hedge fund managers and from lobbyists so far this cycle. It's easy to talk about cleaning up the corruption in Congress at the root of all the county's problems. But who is willing to walk the walk? Hint: look down at the bottom of the two lists. Not everyone is the same.

Another list: the probable chairs of the House committees starting January 3:

• Agriculture- Collin Peterson (Blue Dog-MN)
• Appropriations- Nita Lowey (D-NY)
• Armed Services- Adam Smith (New Dem-WA)
• Budget- John Yarmuth (D-KY)
• Education and Labor- Bobby Scott (D-VA)
• Energy and Commerce- Frank Pallone (D-NJ)
• Ethics- Ted Deutch (D-FL)
• Financial Services- Maxine Waters (D-CA)
• Foreign Affairs- Eliot Engel (New Dem-Israel)
• Homeland Security- Bennie Thompson (D-MS)
• House Administration- Zoe Lofgren (D-CA)
• Judiciary- Jerry Nadler (D-NY)
• National Resources- Raúl Grijalva (D-AZ)
• Oversight and Government Reform- Elijah Cummings (D-MD)
• Rules- Jim McGovern- (D-MA)
• Science, Space and Technology- Eddie Bernice Johnson (D-TX)
• Small Business- Nydia Velázquez (D-NY)
• Transportation and Infrastructure- Pete DeFazio (D-OR)
• Veterans Affairs- Mark Takano (D-CA)
• Ways and Means- Richard Neal (D-MA)
• Human Rights- Jim McGovern (D-MA)
• Intelligence- Adam Schiff (New Dem-CA)

Now, in light of Pelosi's much ballyhooed H.R. 1 (which I totally support, even though it doesn't go nearly far enough towards reform), keep these logical and pretty obvious words from Alexandria Ocasio-Cortez in mind:

I took a look at who the biggest contributors are to each of the incoming chairmen to see if there is any connection to favors they could do as chairs of their committees. And, there were. We've been talking about how corrupt and deceitful New Jersey hack, Frank Pallone, is blocking the creation of a Climate Change Committee, or at least blocking the idea of the committee having any power at all. It's a turf war based on the bribes he gets from Oil and Gas. We'll get back to him in a moment.

A reminder: certain committees are honey pots for corrupt members looking for cash. Generally speaking, congress members flocking to the Financial Services Committee, for example, are looking for bribes from Wall Street. Ditto for the House Ways and Means Committee. The Agriculture Committee is also a get-rich-quick scheme. Same with Armed Services and the notorious Energy and Commerce Committee. I should mention there are also members who go to those committees in order to reform them00 but not many. Let's start with Agriculture, which Collin Peterson-- a super-corrupt Blue Dog-- has ruin before and used as a meeting ground for Blue Dogs interested in his quid pro quo way of dealing with Agribusiness. What businesses have been most generous to Mr. Peterson? Well, this cycle the top half dozen in order of generosity: Crop Production & Basic Processing, Agricultural Services/Products, Food Processing & Sales, Securities & Investment, Dairy and Forestry & Forest Products. Overall this quarter, his top sector for collecting bribes as... Agribusiness and he took $533,825, a nice haul. At the height of his chairman glory days (2006), Agribusiness paid off Peterson to the tune of $393,586. Since 2000, Peterson has gobbled up over $4 million from Agribusiness. During a time period when the sector has given almost double to Republicans ($204,052,583) than Democrats ($107,213,690) Peterson has done very well for himself. He is a living case study for bribery in Congress. It's a disgrace that at the same time Pelosi is introducing H.R. 1, she is also giving Collin Peterson back the chair of the Agriculture Committee, making a mockery of her call for reform.

A half dozen who should be rotting in prison cells

Let me take the 4 committees involved with money-- Appropriations (Nita Lowey), Budget (John Yarmuth), Financial Services (Maxine Waters) and Ways and Means (Richard Neal) in one shot. In way of comparison, let me start by showing you how much the out-going Republican chairs have taken from the Finance Sector (since 2000):

Appropriations- Rodney Frelinghuysen (R-NJ)- $1,714,880
Budget- Steve Womack (R-AR)- $681,143
Financial Services- Jeb Hensarling (R-TX)- $7,916,748
Ways and Means- Kevin Brady (R-TX)- $4,160,535

OK, now let's look at the incoming Democratic chairs, who you might think are less corrupt than the Republicans. Mixed bag on that one:

• Appropriations- Nita Lowey (D-NY)- $5,215,043
• Budget- John Yarmuth (D-KY)- $689,012
• Financial Services- Maxine Waters (D-CA)- $1,826,285
• Ways and Means- Richard Neal (D-MA)- $5,481,179

Let's just look at the current cycle. Lowey's top sector for contributions: Finance ($323,030). Yarmuth's top sector: Labor ($141,000). Waters' top sector: Finance ($412,579). And Neal's top sector: Finance ($894,530). Certainly Lowey, Waters and Neal will all be in, let's say, awkward ethical situations when considering and writing legislation on banks, investments, insurance, real estate, taxes, etc.

Let's move to Armed Services. Adam Smith is considered a friend of the Military Industrial Complex. This cycle his biggest sector for bribes was, of course, Defense ($206,950). His #1 industry-- Defense Aerospace; among his top half dozen: Defense Electronics, Electronics Manufacturing and Equipment, Miscellaneous Defense. Career long he's taken $1,140,050 from the Defense sector. The current chairman, Mac Thornberry (R-TX) has taken $1,562,150. No doubt Smith will quickly surpass him.

Bobby Scott (D-VA) will chair the Education and Labor Committee. His top sector this cycle was-- no surprise-- labor ($136,000). Among his contributors, the half dozen industries that forked over the most: #1- Public Sector Unions, #2- Building Trade Unions, #4- Education, #5- Industrial Unions. Since 2000, unions have contributed $1,437,250 to Scott's campaigns. Education isn't one of the high rolling sectors but the sector contributed $20,400 to his campaign this cycle (and $120,254 career-long).

Energy and Commerce has it's fingers in a lot of pies-- as does the incoming chairman, Frank Pallone. This cycle his 5 biggest contributing cycles were sectors his committee writes legislation for:

• Health- $724,700
• Communications/Electronics- $333,451
• Finance- $214,450
• Labor- $187,525
• Energy and Natural Resources- $178,199

His biggest industries this cycle were health professionals, Pharmaceuticals and Telecom services, industries he will be writing legislation for in the next Congress. but career-long, this is what he's gotten from the sectors that are most eagle to influence him:

• Health- $6,067,900, the most of any member of the House, past or present!
• Communications/Electronics- $1,536,862
• Finance- $2,179,885
• Labor- $2,891,945
• Energy and Natural Resources- $862,516

I think I'm going to stick with Pallone and what he's up to in terms of the turf war he's waging against Alexandria Ocasio, or against her proposal to establish a select committee to deal with the #GreenNewDeal. Some of the other chairs are screaming bloody murder over this as well, since if an effective committee was re-authorized-- the Dems had one in 2007-11 but Boehner immediately abolished it upon the GOP victory in 2010-- it could have jurisdiction or co-jurisdiction in many areas and threaten the ability of committees to squeeze bribes out of almost every industry.

First off, Pelosi, who faced this in 2007 when she first established a Select Committee on Climate Change. She compromised and made it into more of an investigative committee with no real powers and it is likely that she will do the same thing because of Pallone's squawking and temper tantrums. The Sunrise Movement and other progressive groups are working to pressure Pelosi to make it stronger and more strategic than what it turned out to be in 2007. The pressure on her will mount as more members sign up as supporters. Right now there are 35 congressmembers who are on board. These:

So where are all the freshmen who just campaigned on the #GreenNewDeal issues? The only freshmen so far are Mike Levin (D-CA), Joe Neguse (D-CO), Ayanna Pressley (D-MA), Rashida Tlaib (D-MI), Ilhan Omar (D-MN), Chris Pappas (D-NH), Deb Haaland (D-NM) and, of course, Alexandria Ocasio (D-NY), who is helping the Sunrise Movement with their efforts in Congress.

Yesterday, author Ellen Brown, in an OpEd for TruthDig, This Radical Plan to Fund the 'Green New Deal' Just Might Work, explained how the Green New Deal could transform the country and why the arguments by conservatives against it can all be overcome. "With what author and activist Naomi Klein calls 'galloping momentum,' the Green New Deal promoted by Representative-elect Alexandria Ocasio-Cortez (D-NY) appears to be forging a political pathway for solving all of the ills of society and the planet in one fell swoop," she wrote. "Her plan would give a House select committee 'a mandate that connects the dots' between energy, transportation, housing, health care, living wages, a jobs guarantee and more. But even to critics on the left, it is merely political theater, because 'everyone knows' a program of that scope cannot be funded without a massive redistribution of wealth and slashing of other programs (notably the military), which is not politically feasible." Brown doesn't believe that and neither do I.

That may be the case, but Ocasio-Cortez and the 22 35 representatives joining her in calling for a select committee also are proposing a novel way to fund the program, one that could actually work. The resolution says funding will come primarily from the federal government, “using a combination of the Federal Reserve, a new public bank or system of regional and specialized public banks, public venture funds and such other vehicles or structures that the select committee deems appropriate, in order to ensure that interest and other investment returns generated from public investments made in connection with the Plan will be returned to the treasury, reduce taxpayer burden and allow for more investment.”

A network of public banks could fund the Green New Deal in the same way President Franklin Roosevelt funded the original New Deal. At a time when the banks were bankrupt, he used the publicly owned Reconstruction Finance Corporation as a public infrastructure bank. The Federal Reserve could also fund any program Congress wanted, if mandated to do so. Congress wrote the Federal Reserve Act and can amend it. Or the Treasury itself could do it, without the need to even change any laws. The Constitution authorizes Congress to “coin money” and “regulate the value thereof,” and that power has been delegated to the Treasury. It could mint a few trillion-dollar platinum coins, put them in its bank account and start writing checks against them. What stops legislators from exercising those constitutional powers is simply that “everyone knows” Zimbabwe-style hyperinflation will result. But will it? Compelling historical precedent shows that this need not be the case.

Michael Hudson, professor of economics at the University of Missouri-Kansas City, has studied the hyperinflation question extensively. He writes that disasters such as Zimbabwe’s fiscal troubles were not due to the government printing money to stimulate the economy. Rather, “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”

As long as workers and materials are available and the money is added in a way that reaches consumers, adding money will create the demand necessary to prompt producers to create more supply. Supply and demand will rise together and prices will remain stable. The reverse is also true. If demand (money) is not increased, supply and gross domestic product (GDP) will not go up. New demand needs to precede new supply.

The Public Bank Option: The Precedent of Roosevelt’s New Deal

Infrastructure projects of the sort proposed in the Green New Deal are “self-funding,” generating resources and fees that can repay the loans. For these loans, advancing funds through a network of publicly owned banks would not require taxpayer money and could actually generate a profit for the government. That was how the original New Deal rebuilt the country in the 1930s at a time when the economy was desperately short of money.

The publicly owned Reconstruction Finance Corporation (RFC) was a remarkable publicly owned credit machine that allowed the government to finance the New Deal and World War II without turning to Congress or the taxpayers for appropriations. First instituted in 1932 by President Herbert Hoover, the RFC was not called an infrastructure bank and was not even a bank, but it served the same basic functions. It was continually enlarged and modified by Roosevelt to meet the crisis of the times, until it became America’s largest corporation and the world’s largest financial organization. Its semi-independent status let it work quickly, allowing New Deal agencies to be financed as the need arose.

The Reconstruction Finance Corporation Act of 1932 provided the financial organization with capital stock of $500 million and the authority to extend credit up to $1.5 billion (subsequently increased several times). The initial capital came from a stock sale to the U.S. Treasury. With those resources, from 1932 to 1957 the RFC loaned or invested more than $40 billion. A small part of this came from its initial capitalization. The rest was borrowed, chiefly from the government itself. Bonds were sold to the Treasury, some of which were then sold to the public, although most were held by the Treasury. All in all, the RFC ended up borrowing a total of $51.3 billion from the Treasury and $3.1 billion from the public.

In this arrangement, the Treasury was therefore the lender, not the borrower. As the self-funding loans were repaid, so were the bonds that were sold to the Treasury, leaving the RFC with a net profit. The financial organization was the lender for thousands of infrastructure and small-business projects that revitalized the economy, and these loans produced a total net income of $690,017,232 on the RFC’s “normal” lending functions (omitting such things as extraordinary grants for wartime). The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms and much more, and it funded all this while generating income for the government.

The Central Bank Option: How Japan Is Funding Abenomics with Quantitative Easing

The Federal Reserve is another Green New Deal funding option. The Fed showed what it can do with “quantitative easing” when it created the funds to buy $2.46 trillion in federal debt and $1.77 trillion in mortgage-backed securities, all without inflating consumer prices. The Fed could use the same tool to buy bonds earmarked for a Green New Deal, and because it returns its profits to the Treasury after deducting its costs, the bonds would be nearly interest-free. If they were rolled over from year to year, the government, in effect, would be issuing new money.

What if Trump heard about from his pal, Abe?

This is not just theory. Japan is actually doing it, without creating even the modest 2 percent inflation the government is aiming for. “Abenomics,” the economic agenda of Japan’s Prime Minister Shinzo Abe, combines central bank quantitative easing with fiscal stimulus (large-scale increases in government spending). Since Abe came into power in 2012, Japan has seen steady economic growth, and its unemployment rate has fallen by nearly half, yet inflation remains very low, at 0.7 percent. Social Security-related expenses accounted for 55 percent of general expenditure in Japan’s 2018 federal budget, and a universal health care insurance system is maintained for all citizens. Nominal GDP is up 11 percent since the end of the first quarter of 2013, a much better record than during the prior two decades of Japanese stagnation, and the Nikkei stock market is at levels not seen since the early 1990s, driven by improved company earnings. Growth remains below targeted levels, but according to Finacial Times this is because fiscal stimulus has actually been too small. While spending with the left hand, the government has been taking the money back with the right, increasing the sales tax from 5 percent to 8 percent.

Abenomics has been declared a success even by the once-critical International Monetary Fund. After Abe crushed his opponents in 2017, Noah Smith wrote in Bloomberg, “Japan’s long-ruling Liberal Democratic Party has figured out a novel and interesting way to stay in power—govern pragmatically, focus on the economy and give people what they want.” Smith said everyone who wanted a job had one, small and midsize businesses were doing well; and the Bank of Japan’s unprecedented program of monetary easing had provided easy credit for corporate restructuring without generating inflation. Abe had also vowed to make both preschool and college free.

Not that all is idyllic in Japan. Forty percent of Japanese workers lack secure full-time employment and adequate pensions. But the point underscored here is that large-scale digital money-printing by the central bank to buy back the government’s debt, combined with fiscal stimulus by the government (spending on “what the people want”), has not inflated Japanese prices, the alleged concern preventing other countries from doing the same.

Abe’s novel economic program has done more than just stimulate growth. By selling its debt to its own central bank, which returns the interest to the government, the Japanese government has, in effect, been canceling its debt. Until recently, it was doing this at the rate of a whopping $720 billion per year. According to fund manager Eric Lonergan in a February 2017 article:

The Bank of Japan is in the process of owning most of the outstanding government debt of Japan (it currently owns around 40%). BOJ holdings are part of the consolidated government balance sheet. So its holdings are in fact the accounting equivalent of a debt cancellation. If I buy back my own mortgage, I don’t have a mortgage.

If the Federal Reserve followed suit and bought 40 percent of the U.S. national debt, it would be holding $8 trillion in federal securities, three times its current holdings from its quantitative easing programs. Yet liquidating a full 40 percent of Japan’s government debt has not triggered price inflation.

Filling the Gap Between Wages, Debt and GDP

Rather than stepping up its bond-buying, the Federal Reserve is now bent on “quantitative tightening,” raising interest rates and reducing the money supply by selling its bonds into the market in anticipation of “full employment” driving up prices. “Full employment” is considered to be 4.7 percent unemployment, taking into account the “natural rate of unemployment” of people between jobs or voluntarily out of work. But the economy has now hit that level and prices are not in the danger zone, despite nearly 10 years of “accommodative” monetary policy. In fact, the economy is not near true full employment nor full productive capacity, with GDP remaining well below both the long-run trend and the level predicted by forecasters a decade ago. In 2016, real per capita GDP was 10 percent below the 2006 forecast of the Congressional Budget Office, and it shows no signs of returning to the predicted level.

In 2017, U.S. GDP was $19.4 trillion. Assuming that sum is 10 percent below full productive capacity, the money circulating in the economy needs to be increased by another $2 trillion to create the demand to bring it up to full capacity. That means $2 trillion could be injected into the economy every year without creating price inflation. New supply would just be generated to meet the new demand, bringing GDP to full capacity while keeping prices stable.

UPDATE: Jumpin' The Fence

Allow me to include some of Kurt Bardella's fascinating weekend essay for USA Today, even though the connection is somewhat tenuous. Last year he switched parties and announced he was becoming a Democrat. He seems happy to have done so... more or less. "My first year as a Democrat," he wrote, "has given me an appreciation of the gulf between the world views of Republicans and Democrats. Even how we digest and process information is so different. In the decade I spent working in Republican politics here in Washington, I don’t think I ever heard climate change come up as a serious topic of social conversation."

Shocking as it may be to learn, Republicans do not sit around and talk about the environment. As a Democrat, I feel like this topic is a consistent focal point of social conversations. In fact, I’ve found the same thing to be true about gun-law reform, racial inequality, social injustice and sexism. As a Republican, I just never talked about these things, but as a Democrat, I talk about them all the time.

I’ll tell you, being a Democrat is a heck of a lot more emotionally exhausting than being a Republican was, because I care about a lot more things than I used to. There must be some wisdom in the old saying that “ignorance is bliss.” It’s funny, because I remember as a Republican, we would often mock “bleeding-heart liberals” who are always “caring” so much. I think to myself now, what the hell is wrong with these Republicans who don’t seem to care about anything at all?

On a personal level, one of the biggest changes for me has been how I view issues of race. I’ve spent the bulk of my life avoiding race. My first name is German, my last name is Italian and I was born in Seoul, South Korea-- I’m adopted. I grew up in a very rough part of upstate New York where I was taunted and at times beat up by kids because I was (and looked) different. On some level, I was conditioned through this treatment to believe that being different was a bad thing and so I avoided it.

I’ve spent the bulk of my life rejecting my Asian-American heritage. Quite frankly, as a Republican, this was very easy to do. The Republican Party’s attitude toward anyone who isn’t white speaks for itself. Why would I want to even pursue an association as a “minority” in a political party that spouts hateful rhetoric about minorities and pushes policies that discriminate against anyone who isn’t white? It was a pretty cowardly attitude considering how many have brave enough to take a stand and fight for minority rights and confront social injustice.

But once I stepped away from the Republican Party, its efforts to promote racism through rhetoric and policies offended me on a very personal level. I began engaging in these issues and exploring what it means to be a minority in America. One of my favorite moments of this year was participating in a panel at Politi-con called “Crazy Political Asians.” At one point, the moderator, MSNBC’s Richard Lui, asked our panel what year each of us owned up to being a member of the Asian-American Pacific Islander community. Most people gave answers like kindergarten or middle school. My response was “2018.” It may seem like a small thing, but saying this in public for the first time was a big deal for me.

...Relief that I was finally able to speak my truth. For the better part of two years, I had felt like a fraud still calling myself a “Republican.” I guess on some level, I had hoped that the cancer that is Trumpism would be isolated to a smaller segment of the Republican Party. Instead, it spread to infect the entire GOP with so-called “leaders” like House Speaker Paul Ryan and Senate Republican Leader Mitch McConnell becoming the biggest enablers and defenders of Trump’s unique brand of toxicity.

Their refusal to forge a different identity within the Republican Party divorced from Trumpism forced me to confront a reality I had tried to avoid-- that there really was no virtue in trying to be a sane voice within the GOP, and it was time to embrace a different way.