Posts

Do U.S. Election Financing Laws Force Politicians to Ignore Limits to Growth?

by Brent Blackwelder

BlackwelderThis fall, huge election campaign spending to influence the outcome of U.S. Congressional races, gubernatorial races, and state legislative races exceeded $3 billion.

Money in politics has stopped progress toward real economic reform and slowed efforts to move to a true-cost, sustainable, steady state economy. It will continue to do so unless people seeking to end today’s cheater economics, with its global casino-style economy, join in the ongoing efforts to change the election financing laws.

Recent decisions by the Supreme Court have made a bad situation much worse. In Citizens United v. FEC, (2010) the Court ruled that it was unconstitutional (a violation of First Amendment-protected free speech) for the government to restrict political spending by corporations. While there are limits on what individuals and corporations may give directly to candidates, there is no limit on corporate contributions to independent political spending to benefit or to smear candidates. The massive floodgates of electoral spending have been opened wide for industries, and today’s electoral spending in the United States amounts to a system of legalized bribery.

Billionaire brothers David and Charles Koch assembled a secretive network of wealthy political donors set to spend about $300 million in the Congressional races in 2014, which is approximately the total spent by Bush and Kerry in the 2004 presidential race. By early September, a full two months before Election Day, Koch-funded groups already had paid for about 44,000 ads in U.S. Senate battleground races. That means approximately one out of every ten TV ads aired in those states had Koch fingerprints.

But fortunately, several dozen organizations are fighting back. For example, Common Cause, United Steelworkers, Sierra Club, United Autoworkers, and other national groups have already had success with a big effort to reverse the Supreme Court’s decisions in Citizens United v. FEC, (2010) and McCutcheon v. FEC (2014). These efforts involve supporting a constitutional amendment permitting Congress and the states to set reasonable limits on political spending. Leadership of these groups has been instrumental in the passage of ballot measures and legislative resolutions in 16 states and about 500 localities, calling on Congress to pass a Constitutional amendment and send it to the states for ratification. These jurisdictions are home to more than 120 million Americans, which is more than one-third of the U.S. population.

Why would cleaner elections matter for achieving a true-cost, steady state economy? The large volume of money that Wall Street puts into elections effectively stymies efforts to reform the U.S. Tax Code. Tax codes around the world tend to subsidize pollution, tolerate externalization of costs, and penalize recycling while rewarding extraction of natural resources and exempting poisons from sales taxes. The United States is not alone among nations providing generous subsidies to polluters: globally, $1.5 billion is provided by governments to fossil fuel industries.

There are many other ways in which corporate money in elections can subvert democracy and block paths to a true-cost economy. Having lobbied Congress for over 40 years, I have seen how the huge amounts of fossil fuel money for politicians have made a lot of Members “climate deniers.”

Chevron & Ecuador, Caroline Bennett-Rainforest Action Network

Hundreds of Chevron’s abandoned open toxic pits remain in Ecuador. Photo Credit: Caroline Bennett-Rainforest Action Network

But it happens in category after category. For instance, as early as the 1990s, I saw the huge influence of corporate money enabling the passage of so-called free trade agreements. Many trade agreements contain a dispute settlement mechanism that allows corporations to sue a government. Such a challenge is not heard in the normal court system of a nation but rather in a secret, three-person tribunal. Currently, a Canadian mining company is suing the government of Costa Rica for $1 billion for denying a permit to mine copper and gold in a tropical rainforest. Costa Rica wants to conserve its rainforests because eco-tourism is a key part of their economy. Chevron has used the secret tribunal process to avoid payment of damages for persistent, serious oil spills in Ecuador.

Another example can be seen in ballot measures such as Proposition 92 in Oregon, which would require labeling of genetically engineered foods. This measure was opposed by major transnational corporations such as DuPont, Coke, and Monsanto, and their war chest was estimated at $25 million. When people use ballot measures to deal with legislatures that refuse to act on issues of public health and environmental protection, industries pour out millions in propaganda to defeat such measures.

In poll after poll, voters say that they care about clean air, clean water, and the environment, but the reality is that it is harder today than at any time in the last 40 years to pass significant legislation to safeguard air, land, and water. The problem has grown much worse since the 1970s, when 30 major environmental laws were passed, and a big part of the problem is the cost of elections.

Twenty-five years ago, I was one of about a dozen environmental leaders called to a U.S. Senator’s office to hear a sobering message about what the staggering costs of elections were doing to Members who were not independently wealthy. He said to us:

To be reelected, this means my having to raise $10,000 every day on average until election day. For you it means two things: 1) I have little time to study issues and legislation and 2) while I may vote with you from time to time, I cannot champion any legislation that would prevent me from getting campaign contributions from major industrial interests.

As recording setting amounts have just been set in the 2014 elections, the need for election financing reform is paramount if we are to prevent these major industrial interests from keeping us on the path of cheater economics.

The New Congressional Debt Panel: An Opportunity for an Essential Economic Debate

by Brent Blackwelder

The debt ceiling debacle was temporarily resolved in early August with a deal that included the creation of a 12-member Congressional debt panel (officially labeled the Joint Select Committee on Deficit Reduction).  This panel is charged with producing recommendations by this November to reduce federal budget deficits by at least $1.5 trillion over 10 years.

The Congressional debt panel will be under huge pressure from the corporate-driven Tea Party to limit its consideration only to cuts in federal government spending to achieve deficit reduction. This means average Americans, the poor, and minorities are the ones who will lose important programs designed for their benefit, while the tax giveaways for transnational corporations will continue. This is a recipe for social upheaval.

Some progressives argue that this panel of six Republicans and six Democrats, along with a President who cannot drive a hard bargain, guarantees gridlock and mounting frustration; however, now is a teachable moment for steady staters and other reformers to get on the offensive and present a larger economic vision. Those concerned with a sustainable economy should seize this opportunity to demand meaningful changes, such as basic reforms of the Tax Code.  But make no mistake — it will be a big fight.  The corporate-run Tea Party is intent on forcing the Republican Party to resist increases in anyone’s taxes, especially those of the well-to-do.

Three revenue changes are urgently needed: (1) cutting government handouts to polluters; (2) instituting revenue-raising measures that move us toward sustainability, such as a carbon tax and a transactions tax on international currency trading, and (3) cracking down on tax dodgers and offshore tax havens, which cost the Treasury an estimated $100 billion a year and which undermine the ability of governments to function.

Cutting Polluter Subsidies

Both state and federal tax codes provide enormous subsidies to polluters, thereby sending the wrong ecological price signal to the consumer. After reviewing more than $100 billion in subsidies to old energy technologies, Michelle Chan, director of international programs at Friends of the Earth, notes: “We are not going to get past reliance on yesterday’s technologies if we continue to subsidize them as if they were brand new.” But a bill in the Senate this spring to cut $20 billion in oil and gas subsidies was vigorously opposed by oil companies like Conoco Phillips who labeled the legislation “un-American.” Since when did subsidies to bloated corporations become the definition of “American?”

Fossil fuel barons, like the Koch brothers who underwrite the Tea Party, understand the enormous potential of solar, wind, geothermal, and conservation efforts to undermine their polluting industries. Thus, they seek to portray the removal of these special fossil fuel subsidies as a “tax increase.” Such flim-flam must be exposed.

Raising Money through Carbon Prices and Fees on Currency Transactions

Putting a price on carbon through a carbon tax or a fuel tax, could provide major revenue. The Carbon Tax Center provides details on such taxes. In addition to fundraising potential, a strong carbon price signal would decrease pollution from fossil fuel usage.

Two huge new revenue raisers could come from the financial sector and involve modest surcharges on groups that not only could readily pay them, but also richly deserve to pay them: major banks and their superrich, often tax-dodging global corporate and individual clients (James Henry and I have suggested these measures before).

The first is a version of the Tobin tax that would apply to wholesale foreign exchange transactions (not to retail customers). Given the astonishing $4 trillion per day of such transactions, a tax of less than a dime per $1,000 of transactions would yield at least $50 billion per year. A similar low marginal tax rate on all international financial transactions, including stocks, bonds, options, and derivatives, could readily collect at least twice that amount.

The second new revenue stream is an “anonymous wealth” tax: a modest 0.5% annual withholding tax on the estimated $15 to $22 trillion of liquid private financial assets — bank deposits, money-market funds, mutual funds, public securities, and precious metals — now sitting, almost entirely untaxed, in anonymous offshore accounts, trusts, and foundations.

This tax could raise between $25 billion to $50 billion per year. Such a tax is easy administratively because these “private banking” assets are heavily concentrated in the hands of a small number of leading banks and the largest recipients of “too big to fail” assistance.

Cracking Down on Tax Dodgers and Closing Loopholes

The unwillingness of Republicans to look at revenues lost as a result of tax dodging is astonishing since the $100 billion they sought to cut is the figure estimated to be lost as a result of offshore tax havens. Fortunately Senator Levin has introduced legislation (endorsed by the Tax Justice Network) to close tax loopholes.

Many objectionable loopholes could be closed and thereby yield revenue. For example, obscenely wealthy hedge fund managers pay a lower rate on their income than regular wage earners.

Rallying for a Just Cause

Now is the time to put grassroots pressure on the media, especially in the states and districts of the 12 Senators and Representatives on the debt panel. Let’s seize the offensive and move the discussion of tax code changes under the framework of responsibility.  Below are the members of the panel, in case you’re feeling motivated to start a conversation.

Democratic Senators: Patty Murray (Washington), Max Baucus (Montana), and John Kerry (Massachusetts).
Republican Senators: Jon Kyl (Arizona), Rob Portman (Ohio), and Patrick Toomey (Pennsylvania).

Democratic Representatives: James Clyburn (South Carolina), Xavier Becerra (California), and Chris Van Hollen (Maryland).
Republican Representatives: Jeb Hensarling (Texas), Dave Camp (Michigan), and Fred Upton (Michigan).