Dean Baker proposes tools for shining a light on crony corporate board directors who help inflate exec mega-salaries

"Director Watch: Putting an End to Blank Checks for CEOs"

Erskine Bowles

Martin Feldstein


"Friends don't try to save money by cutting their friends' pay. And when [corporate board] directors themselves are pocketing hundreds of thousands of dollars a year for attending 4-10 meetings, there is little incentive to take their jobs seriously."

-- Dean Baker, in "Corportate Cronyism: The Secret to Overpaid CEOs"

by Ken

In "Corportate Cronyism: The Secret to Overpaid CEOs," Dean Baker of the Center for Economic Policy Research (CEPR) tackles the subject of out-of-control executive pay, noting that "CEOs can get paychecks in the tens or hundreds of millions even when they did nothing especially notable."

They may just have been in the right place at the right time, like Lee Raymond, who "retired from Exxon-Mobil in 2005 with $321 million . . . at a time when a quadrupling of oil prices sent profits soaring." They may even have presided over their companies' tanking, like Home Depot's Bob Nardellior the financial-industry CEOs who "took their companies to the edge of bankruptcy or beyond and still walked away with hundreds of millions of dollars in their pockets."

"It's not hard," says Dean, "to write contracts that would ensure that CEO pay bears a closer relationship to the company's performance."

For example, if the value of Raymond's stock incentives at Exxon were tied to the performance of the stock of other oil companies (this can be done) then his going away package probably would not have been one-tenth as large. Also, there can be longer assessment periods so that it's not possible to get rich by bankrupting a company.

If anyone were putting a check on CEO pay, these sorts of practices would be standard, but they aren't for a simple reason. The corporate directors who are supposed to be holding down CEO pay for the benefit of the shareholders are generally buddies of the CEOs.

Corporate CEOs often have considerable input into who sits on their boards. (Some CEOs sit on the boards themselves.) They pick people who will be agreeable and not ask tough questions.

For example, corporate boards probably don't often ask whether they could get a comparably skilled CEO for lower pay, even though top executives of major companies in Europe, Japan, and South Korea earn around one-tenth as much as CEOs in the United States. Of course this is the directors' job. They are supposed to be trying to minimize what the company pays their top executives in the same way that companies try to cut costs by outsourcing production to Mexico, China, and elsewhere.

But friends don't try to save money by cutting their friends' pay. And when the directors themselves are pocketing hundreds of thousands of dollars a year for attending 4-10 meetings, there is little incentive to take their jobs seriously.

Instead we see accomplished people from politics, academia, and other sectors collecting their pay and looking the other way. For example, we have people like Erskine Bowles who had the distinction of sitting on the boards of both Morgan Stanley and General Motors in the years they were bailed out by the government. And we have Martin Feldstein, the country's most prominent conservative economist, who sat on the board of insurance giant AIG when it nearly tanked the world's financial system. Both Bowles and Feldstein were well-compensated for their "work."

Dean asks, why does it matter? And he suggests two reasons:

• "[I]t takes away money that rightfully belongs to shareholders, which include pension funds and individuals with 401(k) retirement accounts."

* "[I]t sets a pattern for pay packages throughout the economy."

When mediocre CEOs of mid-size companies can earn millions or tens of millions a year, it puts upward pressure on the pay of top executives in other sectors."

It is common for top executives of universities and private charities to earn salaries in the millions of dollars because they can point to executives of comparably sized companies who earn several times as much. Those close in line to the boss also can expect comparably bloated salaries. In other words, this is an important part of the story of inequality in the economy.

ENTER "DIRECTOR WATCH" AND "PAY PALS"

CEPR has taken two steps to shine a light on corporate-board cronyism, Dean says.

• To try to impose the checks that don't currently exist . . . CEPR has created Director Watch. This site will highlight directors like Erskine Bowles and Martin Feldstein who stuff their pockets while not performing their jobs.

• And CEPR has worked with Huffington Post "to compile a data set that lists the directors for the Fortune 100 companies, along with their compensation, the CEOs' compensation, and the companies' stock performance. This data set is now available at the Huffington Post as Pay Pals.

"Perhaps," says Dean,

a little public attention will get these directors to actually work for their hefty paychecks. The end result could be to bring a lot of paychecks for those at the top back down to earth.

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When masters of corruption are also students -- the thrill of the fall of Bo Xilai

Former Chinese Communist Party hot shot Bo Xilai and his apparently even more crooked (and suspectedly homicidal) wife, Gu Kailai, in Beijing in 2007

"For much of the last decade, while Bo Xilai was busy moving up the ranks of the Communist Party, and even striking populist themes aimed at improving the lot of the poor, his relatives were quietly amassing a fortune estimated at more than $160 million. His elder brother accumulated millions of dollars' worth of shares in one of the country's biggest state-owned conglomerates. His sister-in-law owns a significant stake in a printing company she started that was recently valued at $400 million. And even Mr. Bo's 24-year-old son, now studying at Harvard, got into business in 2010, registering a technology company with $320,000 in start-up capital."

-- from "As China Official Rose, His Family's
Wealth Grew," by the NYT's David Barboza

by Ken

Oops! How tactless of Bo to get caught! Not to mention the missus's oopsiness in being suspected of involvement in the possible murder of a British businessman last November. (Suspicion that her husband may not have encouraged the most zealous investigation into the case has added to his litany of woes.) In what appeared to those of us far removed from the inner workings of Chinese politics, it led to Bo's stunningly swift removal from his seat on the Politburo and his important party command post in Chongqing. Here's how David Barboza sets the tone for his report:

Just a few weeks before his dramatic fall from power, Bo Xilai wrote an inscription in calligraphy, praising the Chongqing Water Assets Management Company, and urging support for its operations.

What he did not say was that a foundation controlled by his younger brother, Bo Xicheng, had acquired a stake in a subsidiary of the water company.

Mr. Bo had done something similar in 2003, while serving as governor here in Liaoning Province. He said his province would make supporting the Dalian Daxian company, a conglomerate engaged primarily in electronics manufacturing, one of the most important tasks of the next five years. A few years earlier, another company controlled by the same younger brother was listed as the owner of nearly a million shares in Dalian Daxian, worth about $1.2 million.

It is not clear whether Mr. Bo knew of the indirect stakes in the companies, or whether his brother profited from his pronouncements. But now, in the aftermath of Mr. Bo's dismissal . . . there are mounting questions about whether [he] used his enormous political clout to enrich himself and his closest relatives.

Worse still, from the standpoint of the Chinese political command:

Bo Xilai's downfall this spring has also cast a sharper spotlight on the hidden wealth and power accumulated by the Communist Party's revolutionary families, and by the sons, daughters, wives and close relatives of the nation's high-ranking leaders.

“This could really open a can of worms,” says Bo Zhiyue, a senior fellow at the National University of Singapore's East Asian Institute. “The relatives of other party leaders are also doing lots of business deals, and people will begin to ask: What about them? Was the Bo family the only one doing this kind of thing?”

Oh my! It's a public airing of dirty linen on the part of people who prefer to be thought of as not having linen.

It may not have been exactly what Deng Xiaoping had in mind when he introduced his brand of capitalism to his brand of socialism, but from where I'm sitting it bears an uncanny resemblance to what in this country passes for "free-market capitalism."

I can't claim credentials as a cultural anthropologist, but one thing I've learned from a lot of years of observing the world is that you don't have to teach people to be corrupt. f iIt's not quite a reflex, it seems to come awfully naturally. Which doesn't mean that you can't, er, coach corruption. People everywhere seem starved for knowledge, to learn better corruption technique -- of both the foundational "basic" and the cutting-edge advanced kinds -- and to stimulate their own creativity.

So it was fascinating to read New Yorker China correspondent Evan Osnos's recent report "The God of Gamblers," about Macau. The subhead was "Why Las Vegas is moving to Macau." The former Portuguese enclave, it seems, has vaulted past backwaterized Hong Kong as an engine of economic activity, all built around its historic involvement in gaming activity. The movers and shakers of Macau, Osnos tells us, have taken inspiration from Las Vegas but then escalated the scale of the operation -- and the movement of money -- to the point where what happens in Vegas seems, comparatively, hardly more significant economically than an after-school fund-raising scheme.

The scale of the corruption and criminality built into Macau's way of doing business, now so deeply embedded in the Chinese political and economic system, has so impressed the moguls of Las Vegas that many of them have jumped in, notwithstanding the serious handicaps faced by foreign players in so heavily rigged a system. None, apparently, embraced this brave new world more gamely than our own Sheldon Adelson. Ironically, his greed and ruthlessness are so extreme that he's facing problems with pesky U.S. government officials for consorting with kinds of people that legal gaming folk in Nevada aren't supposed to be consorting with. Oops!

I'm not planning to hold my breath till we see Shelly in irons facing life-altering criminal charges. It would be a sad commentary on wealth in free-market America if a man couldn't intimidate and buy his way out of such petty bureaucratic snafus. After all, is there any goal we can more reliably expect a President Willard Inc. to pursue than the final conversion of the U.S. economy to an all-rape, pillage, and plunder model?

Very much like the end product of Deng's "reforms" in China. It appears, if I've read Evan Osnos correctly, that the scale of corruption in China is so massive that the political command couldn't materially interfere with the money machine that is Macau if it was so inclined, which it shows no evidence of being. Oh, the Chinese oligarchs may look pretty tough when they're having unarmed demonstrators massacred, or riding herd on troublemakers intent on, well, making trouble regarding the way their country is run. It's quite another thing, though, to interfere with the livelihoods of, you know, players. Besides, aren't the authorities who would be in a position to exercise any such authority being sufficiently paid off by those players?

It all seems to work out as long as nobody gets too greedy.

Which brings us back to the unfortunate case of Mr. Bo and Ms. Gu. And again from where I'm sitting, it looks like the all-too-familiar case of authorities being forced to step in when one of their own just doesn't know his own place, and acts in a way that not only embarrasses but forces unwelcome attention on people who don't like being thusly embarrassed or facing unwelcome scrutiny.

It's a very Chinese story, I know. Specifically, a People's Republic of China story. Still, in its basic outlines, it has an awfully comfortable, familiar feeling.

Sheldon Adelson's monument to 21st-century corruption, the
Venetian Macao opened in 2007 as the world's largest casino.

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Alan Grayson Meets Joshua Holland, Part II: The GOP Economic Agenda All Comes Down To Crony Capitalism

Last month Alan Grayson wrote a note called "The Myths That Are Killing Us"-- the hard myths that no Republicans, and very few Democrats, ever challenge. this was his list:

1. The Government can't create jobs. (Tell that to FDR, who created four million jobs in three months.)

2. Tax cuts reduce the deficit. (Doesn't it bother them that a man named "Laffer" came up with this one?)

3. A fetus is a baby.

4. The poor have too much money.

5. Cutting the federal deficit will end the recession.

6. The rich are incentivized by tax cuts, while the poor are incentivized by lower wages, no benefits, an end to the minimum wage, and unemployment.

7. An unwanted child is God's will.

8. Everyone who wants health insurance has it.

9. The problem with education is the teachers.

10. The "free market" satisfies every human need.

11. There is no discrimination in America anymore.

12. The distribution of wealth and income are irrelevant.

He got a lot of comments and suggestions from his supporters and last week he sent out an e-mail with the crowd-sources follow-up list-- 20 more destructive myths:

1. One gender is better than the other, one race is superior to all others, and there is only one true religion.

2. You can get any medical treatment that you need, for free, in any hospital emergency room.

3. Ronald Reagan won the Cold War.

4. The environment can protect itself.

5. It is better for America to be feared than loved.

6. Only the wealthy create jobs.

7. America is a Christian nation.

8. Human beings are not the cause of climate change.

9. Minority women have children in order to qualify for welfare.

10. President Obama wants to take away our guns.

11. The more we spend on the military, the safer we are.

12. Corporations use tax cuts to hire people.

13. The unemployed are lazy and stupid.

14. Rich people are smarter than everyone else.

15. We will never run out of oil.

16. Invading foreign countries wins hearts and minds.

17. Science is a matter of opinion.

18. Instigating unnecessary wars shows your support for the troops.

19. Corporations are people.

20. Money is speech.

"Every one of these myths," wrote Grayson, "is fascinating in its own right. You could write a whole book about each one." And, as we saw when Alan released his first list almost exactly one month ago to the day. Joshua Holland pretty much already has, The Fifteen Biggest Lies About The Economy. Early in his book Holland tackled the package of right-wing myths about the efficacy of a so-called "free market" and how it would just thrive without government interference. Let me cut right to his concluding section.

If anyone truly believed that the U.S. economy bore even a vague resemblance to a free market, surely the multibillion-dollar bailouts that Wall Street has enjoyed since the collapse of the debt-backed securities market came as an eye-opener. According to market theory, businesses that are poorly run-- that take stupid risks-- should crash and burn, and their workers, equipment, and capital are supposed to end up being absorbed by more productive enterprises.

In the lead-up to the crash, the giants of Wall Street-- having relentlessly pushed for deregulation of the finance sector-- thought that they’d stumbled across a formula for making securities backed by very risky loans risk-free. With the housing market booming through 2007, they figured they had a cash cow-- that they could sit back and collect endless fees for putting together these shady securities. They told mortgage lenders that they’d buy up any loan the lenders could generate. This led to the creation of things such as “liar loans”: mortgages that didn’t require borrowers to prove that they in fact earned $100,000 a year at their $35,000 jobs.

Then everything went south in the housing market, as it was clear to some people that it inevitably would (a “bubble,” after all, is when asset values rise well beyond what the laws of supply and demand would dictate). Yet despite the fact that the banks had lauded the power of “free markets” to correct themselves when lobbying for deregulation for years, when their businesses were threatened they didn’t dream of taking their lumps according to the model. They screamed that they were too big to fail and turned to the taxpayers for a lifeline.

Even if we accept the logic that these big institutions’ sudden collapse would have sent the United States-- and the world-- into another Great Depression, there were still a number of ways that federal officials could have intervened. The most “free market” thing to do would have been to seize the insolvent banks, liquidate their bad holdings in an orderly manner, and then return them, smaller, leaner, and more focused on their core business-- lending and holding deposits-- to the private sector. This would have wiped out the investors who took a risk buying shares in the banks and the management that had driven the financial sector into the ground and also would have come at a considerably lower price to Dick and Jane Taxpayer.

That happened to a degree in the United Kingdom, where British taxpayers’ cash earned them a controlling interest in the banks they bailed out. In the United States, however, the bailout-- under the guidance of former Goldman Sachs CEO Henry Paulsen-- was designed to leave those who had invested in Wall Street’s ailing financial giants unharmed. Paulsen injected $10 billion into Goldman Sachs, twice as much as super-investor Warren Buffet did, but the U.S. taxpayers got a quarter of the value that Buffet received in exchange. According to Simon Johnson, the former chief economist for the International Monetary Fund, Paulson’s bailout deals gave taxpayers less potential for profit when the banks recovered than shareholders such as Goldman Sachs chief executive officer Lloyd Blankfein and Saudi Arabian prince Alwaleed bin Talal, the owner of 4 percent of Citigroup Inc. Johnson called the transactions “just egregious.”

How could such a thing happen, when both Democrats and Republicans supposedly embrace the free market? As the Washington Post reported, “An army of accountants, financial advisers, asset managers, lobbyists and others descend[ed] on Washington as part of the government’s attempts to rescue the economy and bail out industries.” In the last quarter of 2008 and the first of 2009, the top twenty-one recipients of bailout funds spent a whopping $18 million lobbying Congress. And according to a report by Public Citizen, “Lobbyists, political action committees (PACs) and trade associations tied to the banks receiving the most federal bailout money [had] scheduled 70 fundraisers for members of Congress” in the eight months following the 2008 elections.

With the helpful “guidance” of an army of lobbyists from Big Finance, the government decided to prop up the ailing banks with a bailout, rather than liquidating them. So the taxpayers took a big chunk of the dubious mortgage-backed paper off the banks’ hands. The feds bought some directly, and they put the U.S. government on the hook for much more by offering guarantees on some dubious securities. This was because without guarantees, the mortgage-backed paper on the banks’ books was impossible to sell, and they couldn’t lend money until they got at least a portion of it cleared.

So, who bought these shady assets, now backed in part by the full faith and credit of the United States of America? Investors, among whom were the very banks that we had to rescue because they were “too big to fail.” According to Bloomberg, “Of the seven biggest owners of residential mortgage-backed securities, only San Francisco–based Wells Fargo & Co. reduced holdings of the debt on its trading book.” The rest added more of the paper to their books. Why? Because they knew there would be people who would buy these securities as long as the taxpayers had a piece of the downside risk. “Anytime people know there’s a buyer coming, they position for that, and that’s clearly what happened here,” Steven Kuhn, the comanager of the Nisswa Fixed Income Fund, told Bloomberg.

Now here comes the fun part. The prices of those dubious securities could well tank again, leaving the banks exposed to losses despite the bailout. “It’s a trade that will likely work out, but it’s still a speculative trade, which is not what a taxpayer should want from firms that have only recently come out of critical care,” said Joshua Rosner, a managing director at New York–based Graham Fisher & Co. So, if it works out, Wall Street stands to make a bundle. And if it doesn’t... would the banks again be deemed too big to fail?

The bailouts were the most visible evidence that the biggest players in fact have a firm grip on the “free market” in the United States. They represented the height of crony capitalism-- of socializing risk while privatizing profits, a perverse reverse socialism that protected the most comfortable among us. And the ultimate punch line is that this was a program designed by people whom the Washington Post’s Peter Whoriskey called the “most ardent disciples of free-market principles.”

Yesterday Republican Budget Chairman Paul Ryan, the Wisconsin Ayn Rand character leading the charge for a Law of the Jungle social order, sheepishly went on national TV to whine to George Stephanopoulos about the furor he causes when he called the Pentagon a pack of liars. Frightened that his disintegrating approval ratings in his own congressional district would take a dangerous hit, he whimpered, "I totally misspoke [dude]." Did he also misspeak when he went out swinging late in 2008, at the bitter end of the Bush Regime, after the TARP Wall Street bailout had failed in the House, to work with Boehner and Cantor to change enough GOP votes so that it would pass on the second round? And now he's back, leading the House GOP further astray with a budget-- "dangerous right-wing social engineering" in the words of one former dangerous right-wing House Speaker-- that would devastate our country beyond anything the Great Depression ever did.

David Stockman: "We've Learned No Lessons"

Liberals like and admire Bill Moyers-- a lot. But this episode with Stockman (above) isn't going to offer comfort or solace to Democratic Beltway Insiders any more than it will please Republican Beltway Insiders. It's all about how crony capitalism is eating the country from the inside. As every Republican running for office continues to pledge undying fealty to Ronald Reagan, they are willfully forgetting the uncomfortable lesson Reagan found out when he tried the trickle down economics being pushed again today by Paul Ryan and the rest of the GOP hierarchy-- charlatans and flimflam men whose electoral careers are being underwritten by the banksters, the oil companies, the Military Industrial Complex and the insurance companies.

When Reagan's budget director, David Stockman, talks about the financialization of the economy-- and how that produces nothing of value at all-- he sounds almost like David Korten, the economist who most represents the ideas behind the Occupy/99% Movement. Listen to disillusioned Republican Stockman above with Moyers. Here's disillusioned Democrat Korten from his book Agenda For A New Economy:

Wall Street is a world of pure finance in the business of using money to make money by whatever means for people who have money. Any involvement in the production of real good and services is purely an incidental byproduct. Maximizing financial return is the game. To that end, Wall Street institutions have perfected the arts of financial speculation, corporate-asset stripping, predatory lending, risk shifting, leveraging, and debt-pyramid creation. Successful players are rewarded with celebrity, extravagant perks, and vast financial fortunes.

Wall Street players justify their actions with the claim that they are creating wealth for the benefit of society, a convenient bit of self-delusion...

The term free market is a code word for an unregulated market that allows the rich to consume and monopolize resources for personal gain free from accountability for the broader social and environmental consequences. A free market rewards financial rogues and speculators [think Romney and Bain, in fact keep them in mind for the rest of this post] who profit from government, social, and environmental subsidies, speculation, the abuse of monopoly power, and financial fraud, creating an open and often irresistible invitation to externalize costs and increase inequality.

Last week Moyers and Stockman explored the tight connection between Wall Street and our governing elites in DC, particularly in the White House-- although Stockman, a former congressman from Michigan, also gets into the problem inherent in a Congress financed by special interests. He advocates banning corporate contributions entirely-- and putting a $100 cap on individual contributions. A different kind of Republican than the kind we're hearing about these days, huh? He's very candid with Moyers about how money dominates politics, distorting free markets and endangering democracy: “As a result we have neither capitalism nor democracy. We have crony capitalism.” He shares details on how the courtship of politics and high finance have turned our economy into a private club that rewards the super-rich and corporations, leaving average Americans wondering how it could happen and who’s really in charge. “We now have an entitled class of Wall Street financiers and of corporate CEOs who believe the government is there to do… whatever it takes in order to keep the game going and their stock price moving upward,” Stockman tells Moyers. Watch it all the way through. It's riveting stuff.

Former Secretary of Labor Robert Reich takes a more direct approach to the lessons we haven't learned-- a surtax on the super wealthy.

Let Santorum and Romney duke it out for who will cut taxes on the wealthy the most and shred the public services everyone else depends on.

The rest of us ought to be having a serious discussion about a wealth tax. Because if you really want to know what’s happening to the American economy you need to look at household wealth-- not just incomes.

The Fed just reported that household wealth increased from October through December. That’s the first gain in three quarters.

Good news? Take closer look. The entire gain came from increases in stock prices. Those increases in stock values more than made up for continued losses in home values.

But the vast majority of Americans don’t have their wealth in the stock market. Over 90 percent of the nation’s financial assets-- including stocks and pension-fund holdings-- are owned by the richest 10 percent of Americans. The top 1 percent owns 38 percent.

Most Americans have their wealth in their homes-- whose prices continue to drop. Housing prices are down by a third from their 2006 peak.

So as the value of financial assets held by American households increased by $1.46 trillion in the fourth quarter, the wealthiest 10 percent of Americans became $1.3 trillion richer, and the wealthiest 1 percent became $554.8 billion richer.

But at the same time, as the value of household real estate fell by $367.4 billion in the fourth quarter, homeowners – mostly middle class-- lost over $141 billion (owners’ equity is 38.4 percent of total household real estate).

Presto. America’s wealth gap-- already wider than the nation’s income gap-– has become even wider. The 400 richest Americans have more wealth than the bottom 150 million Americans put together.

Given this unprecedented concentration of wealth-- and considering what the nation needs to do to rebuild our schools and infrastructure while at the same time saving Medicare and reducing the long-term budget deficit-- shouldn’t we be aiming higher than a “Buffet tax” on the incomes of millionaires?

There should also be a surtax on the super rich.

There probably isn't a more dedicated progressive running for Congress anywhere in the country than Norman Solomon. I know that sounds like quite the statement. But I mean it. Earlier today I talked with him about what Stockman and Reich had to say about crony capitalism and how these policies are effecting our democracy. His response will help you understand why Blue America endorsed him and why we're so enthusiastic about his race against a bunch of garden variety Democratic hacks (nice ones, I'm sure). Please help us get Norman to the $10,000 mark with as small or large a contribution as you can afford for someone who will actually be able to replace Lynn Woolsey and Dennis Kucinich in Congress.

What's at stake is democracy-- rule by the people, as opposed to rule by big money. But I will be blunt here: Progressives must take much more seriously the necessity of gaining electoral power for the 99 percent. While we may often say and write very perceptive things, government continues to largely function in the service of large corporate interests. As an antidote to the poison of "corporate personhood," we've got to nurture genuine grassroots campaigns that are infused with progressive values.

That's what my campaign for Congress is about. We already have 850 volunteers, 3,800 individual donors and tremendous momentum, while I refuse to take a dime of corporate PAC money. In this "grassroots vs. AstroTurf campaign," voting begins in less than 60 days for an open seat in the new coastal district north of the Golden Gate Bridge. Right now, time is of the essence. How many lawn signs and brochures will our campaign be able to afford as we go to the printer later this month? In a significant way, that's up to you.

If we have "military Keynesianism," sez Willard Inc., why not "crony Keynesianism"? After all, aren't cronies people, just like corporations?

FLASHING BACK TO MY 4TH OF JULY POST, 2010:

So THAT'S why we're in Afghanistan! It's "military Keynesianism"

"This is what the American dream has come to? Your founders warned you about this. Warned you that standing armies and unrestrained banks would cost you your freedom. And the sad thing is that most Americans are ok with it." (Ian Welsh, today -- see below)

"Obama has to stay in Afghanistan because war spending is one of the only reliable forms of stimulus he has. The economy is in bad shape, and it needs that stimulus. Since he can’t get a new large stimulus through Congress that means he MUST keep the Afghan war going if he doesn’t want an economic disaster, which would then lead to an electoral disaster."

-- Ian Welsh, in a recent blogpost,

"Actually, Afghanistan is a war of choice"

"The bottom line is that a lot of consultants are making a lot of money from Mitt Romney with mixed results."

-- an "unaffiliated GOP campaign-finance attorney," speaking anonymously to WaPo's Dan Eggen "in order to be candid"

by Ken

I couldn't help but flash back to my belated discovery of the concept of "military Keynesianism" when I noticed this hilarious story washingtonpost.com this afternoon (presumably destined for tomorrow's paper):

Consultants benefit from Mitt Romney campaign


By Dan Eggen, Monday, February 27, 12:24 PM

Spencer J. Zwick started his career a decade ago as Mitt Romney's 22-year-old personal assistant at the Winter Games in Salt Lake City, then went on to become a senior gubernatorial aide, co-founder of an equity fund with one of Romney's sons and a top fundraiser for Romney's 2008 campaign.

Now Zwick serves as Romney's finance chairman for the 2012 presidential election. But he doesn't actually work for the campaign. Instead, he is paid through a Boston company he created, SJZ Inc., which has taken in nearly $5 million for "fundraising consulting" from Romney so far this election season.

Zwick is among a close-knit and intertwined group of senior Romney advisers who work at firms that have collected millions of dollars in consulting fees from the campaign and, in some cases, from the pro-Romney "super PAC" that is assisting in his run for the White House, according to recent campaign disclosures.

The extent of the campaign's reliance on outside firms is unusual for a major presidential bid, experts say. And records show that most of the firms are staffed by longtime advisers or former employees from Romney's 2008 campaign.

The arrangement not only has benefitted several of those close to Romney, but it also makes it harder to determine how the candidate is spending his donors' money, since salaries and other details about the outside operations are kept under wraps.

Romney campaign officials, who declined to comment on the record, said their use of consultants is no different than that of numerous other candidates, including President Obama.

Most political campaigns use consultants to produce ads, run polling and perform other specialized work. Obama, for example, has a clutch of longtime advisers, such as David Axelrod, who run outside consulting shops that do business for the campaign.

But Romney's use of consultants extends to areas such as fundraising, which is common for congressional races but far less so for major presidential campaigns, according to experts and disclosure reports. Romney has paid $4.6 million to Zwick's firm for fundraising consulting, for example, compared to $75,000 reported by Obama for the same type of expenditure.

"The bottom line is that a lot of consultants are making a lot of money from Mitt Romney with mixed results," said one unaffiliated GOP campaign-finance attorney, who spoke on condition of anonymity in order to be candid. . . .

There's lots more, but I think you get the general drift. And couldn't you just bust a gut laughing? I think this is simply high-larious! Whadja expect! That those fat COWs (Cronies of Willard) were going to have to sit on their butts waiting for Willard to make it to the White House to cash in? Why, that would be positively un-American. And anyone doesn't think so is just envious.

How did the Afghanistan adventure illustrate the working principles of military Keynesianism?

Obama has to stay in Afghanistan because war spending is one of the only reliable forms of stimulus he has. The economy is in bad shape, and it needs that stimulus. Since he can’t get a new large stimulus through Congress that means he MUST keep the Afghan war going if he doesn’t want an economic disaster, which would then lead to an electoral disaster.

This is the sad truth of America: the only acceptable form of Keynesian spending is military Keynesianism. Instead of hiring tens of thousands of teachers, building a high speed rail network across the country, refitting every building to be energy efficient and doing a massive solar and wind build-out to reduce dependence on oil, well, the US would rather turn Afghans and Pakistanis into a fine red mist.

That fine red mist is what’s keeping the American economy from going under entirely. And so, even if it’s the wrong thing to do, even if it’s the graveyard of America’s Empire, the war will continue.

And wouldn't you know, as soon as the new generation of austerity-packing deficit hatcheteers had the prospect of serious cuts in military spending thrown at them, they wailed in unison about the terrible hit the economy would take from the loss of all those jobs! These worthless sacks of doody who would have gleefully thrown their grandmas out of work -- well, maybe not their grandmas, but sure as shootin' yours -- in the name of "fiscal prudence," who bray at every opportunity that there ain't no such-a thing as government economic stimulus, 'cause as we all know government can't create jobs, turn out to be die-hard Keynesians, committed to the stimulative value of government spending, as long as it's on cool stuff like a war machine and actual wars.

Already I think we knew that Ian might have wished to expand his statement, "This is the sad truth of America: the only acceptable form of Keynesian spending is military Keynesianism," to encompass all forms of national-security spending, for which "fiscally prudent" right-wingers are always prepared to issue blank checks.

But now, thanks to our future real "CEO president" (not to be confused with the parody version we had before the present occupant), we learn that there's another form of what I learned in high school economics to call "priming the pump": shoving megabucks at your cronies. Just remember that all that campaign loot being shoveled into JRZ Inc., the company set up for the purpose by Willard Inc.'s old P.A. from the glory days of his Salt Lake City Olympics scamming, is available to be spent on jewelry and yachts and foie gras and whatnot, enabling the jewelers and yacht makers and vendors and duck- and goose-liver-stuffers to hire more staff and so on down the trickle chute.

I love it when grass-roots Republicans in primary states tell marauding journalists that they're leaning toward Willard Inc. because of his business background and understanding of how to get the economy going. Yeah, sure -- if you're a lucky COW.


THEN THERE'S MURDOCH-STYLE CRONY KEYNESIANISM,
WHERE THE CRONIES PAY OFF THE GOVERNMENT WHORES

From nytimes.com this afternoon:

Inquiry Leader Says Murdoch Papers Paid Off British Officials

By SARAH LYALL
Published: February 27, 2012

LONDON -- The officer leading a police investigation into Rupert Murdoch's British newspapers said on Monday that reporters and editors at The Sun tabloid had over the years paid hundreds of thousands of dollars for information not only to police officers but also to a "network of corrupted officials" in the military and the government.

The officer, Deputy Assistant Commissioner Sue Akers, said that e-mail records obtained by the police showed that there was a "culture at The Sun of illegal payments" that were authorized "at a very senior level within the newspaper" and involved "frequent and sometimes significant sums of money" paid to public officials in the Health Ministry and the prison service, among other agencies.

The testimony was a sharp new turn in a months-long judicial investigation of the behavior of Murdoch-owned and other newspapers, known as the Leveson inquiry. It detailed financial transactions that showed both the scale and the scope of alleged bribes, the covert nature of their payment and the seniority of newspaper executives accused of involvement. . . .

But of course the U.S. media properties of Master Rupert's News Corp. would never do anything like that here, would they? Probably the company has already investigated just to make sure, just the way the British News Corp. properties did.

#

No New Texans!

The GOP Establishment-- call it plutocracy or fascism... it's the elites who run the right-wing show-- smells blood in the water... Obama's. They're positive they can beat him in 2012, sweep Congress and roll back what's ever left of the New Deal and maybe even democracy, which they've always detested, itself. The moron zombie base is worked up and ready to consign its future generations to slavery and Democrats are depressed and deflated by Obama's shocking conservatism. But they know-- like Obama knows-- that his best chance for a second term rests with an over the top Republican nominee. And, as the corndog and fried-butter-on-a-stick eaters at this weekend's Ames straw poll proved, that's exactly what the Republican base wants. They picked, overwhelmingly, the craziest, least electable candidates. Romney, the anointed candidate of the Establishment-- who, regardless of what the base (and Obama) want, will be the GOP nominee-- barely made a blip, with a dismal 7th place finish, even below joke candidates Rick Santorum and Herman "the Hermanator" Cain.

Texas Governor Rick Perry announced his intention to run on the sane day as the Ames straw poll. He was drafted by the Republican Establishment. His job is to knock out Bachmann. The Roves and Aileses and their plutocratic/fascist backers don't care if Perry manages to go all the way or if he just winds up as Romney's VP nominee... they just want Bachmann and her crazy eyes and her closet case psychotic husband out of the race as soon as possible.

Less than a month ago we looked at a laundry list of reasons many on the far right fringes-- i.e., the typical GOP activist-- can't embrace Perry. (Yesterday Think Progress had a more all-encompassing laundry list worth taking a look at.) But this seems to be as big a problem for him as Romneycare and the consistent pattern of flip-flopping are for Mitt:

Perhaps the biggest issue people opposed to the nanny state should be concerned about is Perry's issuance of an executive order back in 2007 that would have forced almost every single girl in the state of Texas to receive the Gardasil vaccine before entering the sixth grade. Perry was in the tank with Merck. There were apparent financial connections between Merck and Perry reported by news outlets, such as a $6,000 campaign contribution and Merck’s hiring of former Perry Chief of Staff Mike Toomey to handle its Texas lobbying work.

The Texas legislature put the kibosh on that idea by crafting a bill that overturned the executive order.

Subsequently, very serious safety issues with the vaccine came to light. The biggest problem with regard to the Gardasil issue was that Perry appeared to be condoning premarital sex, or at least assuming that middle school girls were going to be engaging in sexual activity, which is the only way that the cervical cancer that the vaccine prevents can be contracted. Many parents and conservatives were justifiably outraged.

When one takes into account these facts about Rick Perry, the only conclusion that can be reached is that Perry is for the expansion of government and its intrusion into our lives.

The new Texas Monthly is running a major feature on how Perry keeps winning-- 10 elections in a row, some against formidable opponents. He may come off like a pathetic lightweight unfit to run a rural post office but he's managed to beat Jim Hightower, John Sharp, Tony Sanchez, Chris Bell, Carole Keeton Strayhorn, Kay Bailey Hutchison, and Bill White-- all of whom are interviewed in the Monthly story.

Saturday's Wall Street Journal opinion page, though, exposed a weakness in the Perry armor that could be deadly-- in fact, a weakness that could be as disturbing for many on the right as it will certainly be for normal Americans. The scandal has been kept in the public eye partially because of carping by teabaggers who see Perry as a phony baloney hack politician and a willing servant for the Establishment they sometimes vestigially sense is their enemy.

Gov. Rick Perry's presidential pitch goes something like this: During one of the worst recessions in American history, he's kept his state "open for business." In the last two years, Texas created over a quarter of a million jobs, meaning that the state's 8% unemployment rate is substantially lower than the rest of the nation's. The governor credits this exceptional growth to things like low taxes and tort reform.

It's a strong message. But one of the governor's signature economic development initiatives-- the Texas Emerging Technology Fund-- has lately raised serious questions among some conservatives.

The Emerging Technology Fund was created at Mr. Perry's behest in 2005 to act as a kind of public-sector venture capital firm, largely to provide funding for tech start-ups in Texas. Since then, the fund has committed nearly $200 million of taxpayer money to fund 133 companies. Mr. Perry told a group of CEOs in May that the fund's "strategic investments are what's helping us keep groundbreaking innovations in the state." The governor, together with the lieutenant governor and the speaker of the Texas House, enjoys ultimate decision-making power over the fund's investments.

Among the companies that the Emerging Technology Fund has invested in is Convergen LifeSciences, Inc. It received a $4.5 million grant last year-- the second largest grant in the history of the fund. The founder and executive chairman of Convergen is David G. Nance.

In 2009, when Mr. Nance submitted his application for a $4.5 million Emerging Technology Fund grant for Convergen, he and his partners had invested only $1,000 of their own money into their new company, according to documentation prepared by the governor's office in February 2010. But over the years, Mr. Nance managed to invest a lot more than $1,000 in Mr. Perry. Texas Ethics Commission records show that Mr. Nance donated $75,000 to Mr. Perry's campaigns between 2001 and 2006.

The regional panel that reviewed Convergen's application turned down the company's $4.5 million request when it presented its proposal on Oct. 7, 2009. But Mr. Nance appealed that decision directly to a statewide advisory committee (of which Mr. Nance was once a member) appointed by Mr. Perry. Just eight days later, on Oct. 15, a subcommittee unanimously recommended approval by the full statewide committee. On Oct. 29, the full advisory committee unanimously recommended the approval of Convergen's application. When asked why the advisory committee felt comfortable recommending Convergen's grant, Lucy Nashed, a spokesperson for Mr. Perry, said that the committee "thoroughly vetted the company."

Starting in 2008, Mr. Perry also appropriated approximately $2 million in federal taxpayer money through the auspices of the Wagner-Peyser Act-- a federal works program founded during the New Deal and overseen in Texas by Mr. Perry's office-- to a nonprofit launched by Mr. Nance called Innovate Texas. The nonprofit was meant to help entrepreneurs by linking them to investors. It began receiving funding on Dec. 31, 2008, soon after Mr. Nance's previous company, Introgen Therapeutics, declared bankruptcy on Dec. 3. According to state records, Mr. Nance paid himself $250,000 for the two years he ran Innovate Texas. Innovate Texas, whose listed phone number is not a working number, could not be reached for comment. (Two phone calls left for Mr. Nance at Convergen's offices went unreturned.)

ThromboVision, Inc., a medical imaging company, was also the recipient of an award from the Emerging Technology Fund: It received $1.5 million in 2007. Charles Tate, a major Perry contributor, served as the chairman of a state committee that reviewed ThromboVision's application for state funding, and Mr. Tate voted to give ThromboVision the public money. One month after ThromboVision received notification that it would receive a $1.5 million state grant in April 2007, Mr. Tate invested his own money in ThromboVision, according to the Dallas Morning News. The Texas paper later found that by 2010 Mr. Tate owned a total of 200,000 preferred shares in ThromboVision.

According to a Texas state auditor's report, ThromboVision failed to submit required annual reports to the fund from 2008 through 2010, when the company went bankrupt. The report noted the tech fund's managers were "unaware of ThromboVision, Inc.'s bankruptcy until after the bankruptcy had been reported in a newspaper." ThromboVision's bankruptcy filing revealed not only that Mr. Tate had been a preferred shareholder in ThromboVision, but so had prominent Perry supporter Charles Miller, who owned 250,000 preferred shares in the company and has donated $125,000 to the governor's campaigns. Three phone calls and an email seeking Mr. Tate's side of the story went unreturned.

All told, the Dallas Morning News has found that some $16 million from the tech fund has gone to firms in which major Perry contributors were either investors or officers, and $27 million from the fund has gone to companies founded or advised by six advisory board members. The tangle of interests surrounding the fund has raised eyebrows throughout the state, especially among conservatives who think the fund is a misplaced use of taxpayer dollars to start with.

"It is fundamentally immoral and arrogant," says state representative David Simpson, a tea party-backed freshman from Longview, two hours east of Dallas. The fund "opened the door to the appearance of impropriety, if not actual impropriety."

...Michael Quinn Sullivan, the president of Texans for Fiscal Responsibility, sees in the Emerging Technology Fund a classic example of the perils of government pork. "The problem with these kinds of funds is that even when they're used with the best of intentions, it looks bad," says Mr. Sullivan. "You're taking from the average taxpayer and giving to someone who has a connection with government officials."

I got an e-mail this weekend from Texas Congressman Lloyd Doggett. He knows Perry well-- and knows what a disaster he's been for ordinary working families in their state. He was sounding the alarm. Here's Doggett's interview Friday on MSNBC:

Maybe Rick Perry did the right thing last Saturday when he asked for America to join him in prayer. Considering the disaster that has been his governorship in Texas, we need every prayer we can get as we try to sort this mess out.

...There is no more extreme, no more disagreeable candidate than Rick Perry.  Want to know just how right-wing Rick Perry is? As Governor of Texas, he even implied that secession was a possibility. That’s right, the Rick Perry, who wants to be President of the United States of America is the same Rick Perry who provided comfort to those Texans, who have supported disuniting from America and seceding.

    •    This is the same Rick Perry whose answer to Texas being the state with the highest percentage of folks without health insurance is to do even less here, while questioning the very existence of Medicare.  

    •    This is the same Rick Perry who has undermined our future economic competitiveness by slashing budgets for primary and secondary education and undermining our institutions of higher learning. 

    •    This is the same Rick Perry that dangerously disregards the importance of protecting the water we drink and the air we breath. Texas now leads the nation in clean-water permit violations in the nation, hazardous waste spills and toxic emissions.

Doggett is hardly the only Democrat sounding the alarm. Paul Begala, who's known him nearly 3 decades-- back when Perry was a freshman Democratic state legislator (nicknamed "Crotch")-- did a good job at the Daily Beast this weekend. "Perry stood out," Begala remembers, "for his modest intellectual gifts... But lack of brains has never been a hindrance in politics." What Begala claims Perry has-- aside from nice hair-- is the willingness to say or do whatever it takes to win, no matter what the ancillary harm. That's the classic definition of a sociopath.

That's truer than ever in relation to today's Tea Party–dominated Republican Party. You’ve gotta be willing to do anything, say anything, accept anything, propose anything, endorse anything, pledge anything. There is nothing too batshit for these people.

Watch your back, Mitt.

How Bad Will The Bush Depression Be?

It looks like Bush is racing in his final days as occupant of the White House to see if he can beat Herbert Hoover's economic record as the most disastrous U.S. president for American families. Today's employment report puts Bush in good shape to go down as the worst of the worst.

With the economy deteriorating rapidly, the nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the government reported Friday morning, and the unemployment rate rose to 6.7 percent.

The decline, the largest one-month loss since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.

The alarming job decline suggests that consumers and businesses have pulled back sharply on spending in response to the worsening credit crisis. That has put pressure on Congress and the White House to come up with a stimulus package that would substitute for the missing private sector outlays.

Over all, the losses since the recession began now total about 1.9 million, with most coming in the last three months.

“We have gone from recession into something that looks more like collapse,” said Ian Shepherdson, chief domestic economist at High Frequency Economics, referring to the accelerating job losses in recent months.

The losses in November far exceeded the 350,000 figure that was the consensus expectation of economists.

And real unemployment numbers are far worse than what is being reported! Meanwhile, the Republican Party has every intention of using it's last dying gasps of power-- in the White House and in the Senate-- to deal the economy a real death blow. Let's hope to God if that happens, it falls particularly hard on Georgia voters who decided that what the country needs is more Republican orthodoxy and more narrow partisan obstructionism. Barney Frank came as close to anyone today to predicting that if GOP extremists are allowed to force the auto manufacturers into bankruptcy, as they have vowed to do, we will soon be wishing it was just a deep recession we are facing.

Although the GOP has been exceedingly generous about some things, when it comes to ordinary working families, all they're willing to extend is the middle finger. Robert Shapiro, chief economist for progressive think tank, the New Democratic Network (NDN) explored the nexus between the current financial crisis and the kind of crony capitalism that has become the defining hallmark of Republican Party economic policy-- and of much of our corrupt, self-serving Insider political class.

Crony capitalism is usually associated with the way many governments in Africa, Asia and Latin America conduct public business, where government contracts, budgets and other public activities are routinely channeled to the families, friends and associates of political elites, rather than being allocated through some open bidding or other democratic processes. Variants of crony capitalism occur in the United States, too. In one infamous example, Halliburton “won” billions of dollars in no-bid contracts for Iraq while its former CEO was Vice President; and crony capitalism lurks behind billions in pork barrel appropriations passed every year by Congress. But when it begins to infect huge government operations taken to deal with an emergency, it has more serious and insidious effects. Japan famously practiced crony capitalism in its multi-trillion-yen “rescue” operations for its failing banking system in the 1990s, and bought itself a decade of stagnation and at least another decade as the worst-performing advanced economy in the world.

he terms of the Citigroup deal raise the specter of crony capitalism. The taxpayers will invest $20 billion in the company, receiving preferred stock that will pay 8 percent dividends, and Citigroup will bear the first $29 billion in losses from its current portfolio of $306 billion in troubled loans and assets. After that, the taxpayers absorb 90 percent of any additional losses in exchange for another $7 billion in preferred stock. The likelihood that Citigroup’s losses will far exceed the first $29 billion is disturbingly high. The financial crisis almost certainly will deliver additional shocks, because the current policies have done little to address the forces driving the crisis. The housing market continues to unravel; and with business investment, consumption and jobs all contracting rapidly, foreclosures continue to rise. As they do, more mortgage-backed securities and the derivatives based on them will go bad, and the consequent losses could claim much of the capital infusions that taxpayers have already provided. As the IMF and others have warned, large additional losses also could come from other sources. Most notably, the spreading global recession, on top of national banking crises in other countries, are producing enormous pressures on government financing operations in a number of nations, including some in the Eurozone, which in turn may produce sovereign debt defaults. And most of the sovereign debt that could well default in coming months is held today by financial institutions, especially ours.

Obama has to do better, much better. And universal health care is a good way to start. Daschle hits the nail on the head when he says that "high health costs hurt the ability of U.S. businesses to stay competitive and create new jobs, making it a 'high priority.'"