Thursday, October 01, 2015

Most Americans Already Know Our Political Elites Are Crooks-- Here's What We Can Do About It


A few days ago a federal judge ruled that contributions to a SuperPAC are admissible as evidence in a political bribery case, in this instance Robert Menendez's political bribery case. It remains to be seen how the Supreme Court justices who were specifically selected to prevent these kinds of rulings-- Scalia, Roberts, Thomas and Alito-- will eventually prevail and overturn the ruling. They won't be fooling the American people, though. This week Gallup released a poll that isn't going to surprise anyone. Most Americans are quite certain that most members of Congress are corrupt. 52% of those polled said that most members are corrupt, and 32% said that their own member was also corrupt, the highest ever by Gallup. Even worse, they felt that 69% of congressmembers are "focused on the needs of special interests instead of their own constituents," and 79% felt congressmembers are just generally out of touch with the concerns of average Americans.
These results come from Gallup's annual Governance poll, conducted Sept. 9-13. By any measure, Congress is not a popular or trusted institution among Americans. The body's current approval rating, 14%, is typical of its ratings over the past several years. Earlier this year, Gallup found that fewer than one in 10 Americans (8%) have a great deal or quite a lot of confidence in Congress.

Majorities of Americans view most members of Congress as corrupt, beholden to special interests and out of touch... Traditionally, Americans have been less critical of their own members of Congress, but last year the percentage of U.S. adults saying their own representative deserved re-election dropped to a record low. These uneasy feelings Americans have for Congress may be exacerbated in the coming days, as the prospect of a government shutdown looms. House Speaker John Boehner's unexpected resignation on Friday highlights how acrimonious congressional divisions have become, leading the House speaker to step down well before his term ends. Speculation is rampant that Boehner's resignation may actually be the action that prevents a government shutdown this week. But if this is true, it could confirm some of Americans' worst impressions of Congress, as it would suggest that simple legislative functions, such as funding the federal government, are enough to thrust the House into leadership turmoil.
Two stories broke just after Gallup released their data. One, from Politico's Ben White, was titled "Bush and Rubio race for Wall Street cash." The second, also from Politico, is about how Members of Congress were selling their votes to payday lenders for contributions

Let's start with the two slimeballs from Florida, Bush and Rubio, who are both wooing Wall Street banksters in mid-October with dueling fundraisers.
The invite to Bush’s breakfast event on Oct. 16-- one of several he will hold that day-- features a daunting array of 68 top Wall Street names including Jets owner Woody Johnson, attorney Larry Bathgate, Barclays executive Patrick Durkin and Highbridge Capital’s Scott Kapnick.

The minimum donation to attend the event is $2,700. Those who commit to contribute and raise $27,000 get a photo opportunity with Bush in addition to the breakfast, which will take place at the Hilton Hotel on Sixth Avenue. Bush supporters say the list reflects the former governor’s dominant position among the financial elite.

“This is the varsity squad,” one donor quipped. “I’m not sure Rubio’s would even qualify as the junior varsity.”

Rubio’s invite features 20 people,including younger and less well-known but rising figures such as Courtney Geduldig, a former Senate Banking staffer now at McGraw Hill Financial. The event, which requires a minimum $1,000 donation and $2,700 to serve as a “host,” will take place at 6 p.m. Oct. 14 at the Fifth Avenue offices of Phil Rosen, a co-chair of law firm Weil Gotshal’s real estate practice and a close associate of billionaire GOP mega-donor Sheldon Adelson. The event invite also features Wayne Berman, a top D.C.-based executive at private equity firm Blackstone Group, who was an early Rubio backer. Jewish Insider first reported on the Rubio invite on Sunday.

But the battle for New York won’t wait until October.

Bush is also in New York this week, with meetings set for Thursday with potential financial industry leaders not currently aligned with any campaign. One meeting will take place Thursday morning in Woody Johnson’s office and is intended to bring on board top financiers not already aligned with Bush’s campaign.

This group includes Paul Singer of hedge fund Elliott Management, perhaps the most sought-after uncommitted Wall Street executive. Singer has been invited to the breakfast, but people familiar with the matter said the hedge fund manager had not committed to attending.

Other invitees to the Bush event include prominent activist investor Dan Loeb of Third Point Partners and longtime GOP fundraiser Georgette Mosbacher, people familiar with the matter said. One source familiar with the matter said Loeb had already committed to backing Bush. A spokesperson for Loeb did not immediately return a call for comment.

Bush’s campaign on Tuesday also rolled out an endorsement from hedge fund manager Anthony Scaramucci of SkyBridge Capital, who previously backed the campaign of Wisconsin Gov. Scott Walker.

In an interview, Scaramucci, a regular presence on financial television shows and at his prominent SALT Conference in Las Vegas, cited his close ties to former President George W. Bush and others in the family’s orbit for his decision to back the former Florida governor.

“I have nothing against Marco Rubio. I just think Gov. Bush has the experience and a great record as an executive,” Scaramucci said. “It’s not Rubio’s time. This is like surfing and it’s Jeb’s wave to surf. It’s been a little shaky because of Donald Trump and the rest of the outsiders, but I do not believe the GOP is going to select a nominee for the most important political job in the world who doesn’t have political experience."
You think this has anything to do with why Gallup found that nearly 7 in 10 Americans say our political elites are "focused on the needs of special interests instead of their own constituents"?

The payday lending story is even more sordid, since it involves overt bribery, although, since Congress has redefined bribery to basically leave out campaign contributions, it doesn't "count" as such-- unless voters are smart enough to send the crooks packing on Election Day. The crooks-- none of whom have been charged with any crimes yet, although an Ethics Committee complaint has been lodged against them-- referred to in the story below include Scott Garrett (R-NJ), Stephen Fincher (R-TN), Steve Stivers (R-OH), Alcee Hastings (D-FL), Jeb Hensarling (R-TX), Blaine Luetkemeyer (R-MO), Patrick McHenry (R-NC), Gregory Meeks (New Dem-NY), Pete Sessions (R-TX), Randy Neugebauer (R-TX) and Kevin Yoder (R-KS). This story, by Jon Prior, is behind Politico's Pro paywall, so I'll share it here:
A dozen lawmakers received campaign contributions from payday lenders at around the same time they were introducing bills and writing letters benefiting the high-cost cash-advance industry, according to a report Wednesday from liberal advocacy group Allied Progress.

The report, which tracks donations going back to 2011, raises questions about whether the industry was too brazen in its use of political contributions to drum up support. The lawmakers include two Republicans aiming for House leadership positions, Reps. Patrick McHenry of North Carolina and Pete Sessions of Texas.

"What this points to is serious," said Karl Frisch, a Democratic strategist and executive director of Allied Progress. "It points to a potential quid pro quo."

But representatives of some lawmakers named in the report pushed back against the conclusions and criticized the group's ideological motivations. Groups representing payday lenders say they were operating within the rules governing how policy can be influenced.

"While we don't specifically comment on political donations, like any other industry, company, advocacy group or individual, we are active in the political process and support candidates that share our views regarding the important issue of preserving access to safe, regulated forms of credit for consumers," Amy Cantu, a spokesperson for the trade group Community Financial Services Association of America, said in a statement.

The report focuses on contributions that came at the same time that lawmakers introduced three bills that advocates say would either weaken the CFPB or grant payday lenders the ability to maneuver around tougher rules and oversight. It also highlights donations that came around the time that groups of lawmakers sent two letters to the Justice Department and government inspector-general offices complaining about an investigation known as Operation Choke Point.

Banks eager to avoid legal problems have cut ties with businesses suspected of fraud, such as payday lenders, as a result of the Choke Point investigation. Republicans and several industries have long accused DOJ and regulators of illegally forcing banks to end these relationships.

In the weeks before McHenry signed an Aug. 22, 2013 letter to Attorney General Eric Holder and Federal Deposit Insurance Corp. Chairman Martin Gruenberg criticizing Choke Point, he received $12,800 in campaign contributions from payday-lending industry executives and political action committees, according to the Allied Progress report.

"While Congressman McHenry is thankful for the support he receives, his legislative activities are dictated by his beliefs, not the interests of any particularly group or individual," a spokesman for McHenry, who is running for majority whip, said in a statement.

The report also flags contributions Sessions took around the time he signed onto bills and letters for the industry. For example, the day before he signed onto a bill last year to end Operation Choke Point, Sessions received a $5,000 campaign contribution from a Cash America political action committee.

Sessions, who's also running for majority whip, did not respond to a request for comment.

The report scrutinizes contributions that came in 2011, when former House Financial Services Committee Chairman introduced a bill that would replace a CFPB director with a five-member panel. Several members, including former Committee Chairman Spencer Bachus and current Committee Chairman Jeb Hensarling raised thousands of dollars from payday lenders at the time, according to the report.

Despite the obvious benefit to the payday lenders, lawmakers say they have pushed for the CFPB to be run by a commission for deeper reasons that have more to do with their worries about the power of a single director, they say, than helping out a particular industry.

"We believe that those who have supported Congressman Hensarling throughout his time in Congress have done so because they believe in the principles of free enterprise and freedom that he has consistently advanced," said Hensarling's chief of staff Andrew Duke.

The report covers donations from trade groups, individual executives and companies like Advance America that gave to lawmakers on a number of occasions when the bills and letters in question were being drafted.

"Advance America's campaign contributions are never contingent on support for our issues. In the past, we have donated to candidates who both support and oppose our industry," said Jamie Fulmer, senior vice president of public affairs at Advance America, in a statement.

The report comes as the Consumer Financial Protection Bureau is making progress on new rules that would crack down on what it says are debt traps that have escaped tough oversight at the state level. The industry and some members of Congress have complained the CFPB is unfairly hurting those who want to take out these loans.

"There's some ugly kinds of credit out there that we have seen that are quite predatory," Cordray told the House Financial Services Committee on Tuesday. "I can't in good conscience just leave that alone," he later added after members of the panel questioned the bureau's authority to write tougher restrictions.

Some links in the report were drawn between groups who did not support some of the bills in question, such as donations from a group representing installment lenders. The report focuses on some Democrats who took money from payday lending groups, such as Reps. Alcee Hastings of Florida and Gregory Meeks of New York.

"I'm for regulating this industry, not necessarily getting rid of it," Meeks told Cordray at the hearing Tuesday. "But having some firm regulation because folks are going to try to find a way to get some money."

Meeks' comments, Cordray noted, highlight how lawmakers from both parties and officials within the bureau are torn between recognizing the need for tougher reforms to rein in abuses and aiding cash-strapped consumers who are trying to make ends meet while their wages have remained stagnant.

"It's not surprising to me that on issues like this that you'll find a few people on the left side and the right side of aisle," Frisch said.
I want to leave this with something I read on Twitter by Wall Street Journal reporter Rebecca Ballhaus. "Bernie Sanders has reached 1 million donors, a landmark Obama didn't reach until February of 2008." At the Journal she reported that Bernie "is the first candidate of the 2016 campaign to announce it had reached this number." Bernie has no SuperPAC-- the only candidate without one-- and he doesn't take money from corrupt special interests; again, the only candidate who doesn't. (UPDATE: In the end, the 3rd quarter was amazing for Bernie-- $26 million, including $2 million just yesterday, almost entirely from 1.3 million small donations.)

The PIRG Education Fund released a report simultaneously that shows how matching funds would reshape the current presidential election. In the introduction they state flatly:
The vast majority of the funds raised for the 2016 election have come from wealthy donors making contributions exponentially larger than most Americans can afford, typically to super PACs and other organizations that can legally accept donations of any size...

The 2016 election will likely break all previous campaign spending records. But more important than the amount of money spent is where that money is coming from. If campaigns relied on small donors for financing, candidates would be encouraged to engage a large number of voters in the political process and would focus on appealing to a broad swath of the population they seek to represent. Instead, an analysis by Politico found that the 67 biggest donors, giving at least $1 million each, contributed more than three times as much as the 508,000 smallest donors combined, according to July 2015 filings with the Federal Election Commission.

The New York Times found that fewer than 400 families are responsible for almost half of the total money raised so far in the 2016 presidential race. Under our current system, courting wealthy mega-donors-- who often have different priorities and policy preferences than most Americans-- has taken precedence over appealing to everyday Americans. It takes a candidate like Donald Trump with vast personal wealth to stay competitive with the top fundraising candidates without relying on wealthy mega-donors.

It doesn’t have to be this way. What if our campaign finance system encouraged candidates to raise money from everyday citizens making small contributions? This paper examines how the 2016 fundraising picture through the July Federal Election Commission (FEC) filing deadline would look if a small donor campaign finance system were in place, where small contributions were matched with limited public funds for candidates who agree to turn down large contributions.

This analysis demonstrates that under such a system, candidates relying on large donors would have a powerful incentive to shift their fundraising strategy to focus on small donors, and access to a narrow set of wealthy donors or vast personal wealth would not determine the viability of a presidential campaign.
Their key findings:
Amplified Voice for Small Donors

Without a small donor matching system, candidates received 33% of their funds from donors giving less than $200. Under the proposed system, 74% of the total funds would come from small donors who gave less than $200 and their corresponding matching funds.

Sanders closes the gap with Clinton

Bernie Sanders raised 77% of his contributions from small donors giving less than $200 compared to Hillary Clinton’s 18% through June, but was outraised by more than three-to-one. Under a small donor matching system, Sanders would close the gap significantly, trailing Clinton in fundraising by just 7%.

Cruz, Paul, Rubio, Carson jump into lead

Jeb Bush raised $11 million directly from his campaign committee, about a tenth of what his Right to Rise super PAC raised according to July FEC filings. While Bush’s direct fundraising is on par with that of Ted Cruz, Marco Rubio, Ben Carson, and Rand Paul, only three percent of his contributions come from small donors, and a matching system would give Cruz, Paul, Rubio, and Carson a commanding lead.

Bush totals less under small donor matching

Jeb Bush is the only candidate who would have raised less directly for his campaign under a small donor matching system that requires candidates to accept lower contribution limits.

Direct fundraising challenges super PAC totals

Under a small donor matching system, Bernie Sanders and Hillary Clinton would raise nearly as much as Right to Rise, the largest Super PAC in the 2016 presidential race.

Clinton, Bush, O’Malley raised largest share from top donors

Hillary Clinton, Jeb Bush, and Martin O’Malley raised the largest share of their funds from donors giving $2,700, the maximum federal contribution limit. A small donor matching system would provide a powerful incentive to refocus candidates on small donors.
That's right, under this proposed anti-oligarchy system, Bernie's campaign would have more money on hand than Hillary’s and Jeb would have probably dropped out of the race already, since both Cruz and Carson would have more cash on hand than him, the only thing he has going for himself. As Jon Schwartz pointed out at The Intercept yesterday:
[T]he Clinton campaign has raised $45.7 million as of June 30, the most of any candidate, and the Sanders campaign has raised just $13.6 million. However, 77 percent of contributions toward Sanders have been $200 or less, compared to just 18 percent of contributions toward Clinton. Sanders would therefore receive more than Clinton in matching funds: $69.6 million for Sanders compared to $43.7 million for Clinton. The total Sanders would raise under a matching system would be $83.2 million, just behind Clinton at $89.4 million.
I'm hearing from the Bernie campaign that they actually had 1.3 million small donors during the quarter ending last night-- for a haul of something like $26 million. Don't wait for this system to be implemented. You can help make sure it is implemented by contributing to Bernie's campaign here.

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