Category: Corruption
Taxing social welfare groups
Propublica gives important background for understanding the alleged improper actions of the IRS:
In the furious fallout from the revelation that the IRS flagged applications from conservative nonprofits for extra review because of their political activity, some points about the big picture — and big donors — have fallen through the cracks.
Consider this our Top 6 list of need-to-know facts on social welfare nonprofits, also known as dark money groups because they don’t have to disclose their donors. The groups poured more than $256 million into the 2012 federal elections.
A century ago, Congress created a tax exemption for social welfare nonprofits. The statute defining the groups says they are supposed to be “operated exclusively for the promotion of social welfare.” But in 1959, the regulators interpreted the “exclusively” part of the statute to mean groups had to be “primarily” engaged in enhancing social welfare. This later opened the door to political spending.
Here are the six points elaborated by Propublica:
1. Social welfare nonprofits are supposed to have social welfare, and not politics, as their “primary” purpose.
2. Donors to social welfare nonprofits are anonymous for a reason.
3. The Supreme Court’s Citizens United decision meant that corporations could pay for political ads, anonymously, using social welfare nonprofits.
4. Social welfare nonprofits do not actually have to apply to the IRS for recognition as tax-exempt organizations.
5. Most of the money spent on elections by social welfare nonprofits supports Republicans.
6. Some social welfare groups promised in their applications, under penalty of perjury, that they wouldn’t get involved in elections. Then they did just that.
A whole new political world
With the advent of super PACs and a growing reliance on secretly funded nonprofits, the very wealthy can pour their money into the political system with an ease that didn’t exist as recently as this moment in Barack Obama’s first term in office. For now at least, Sheldon Adelson is an extreme example, but he portends a future in which 1-percenters can flood the system with money in ways beyond the dreams of ordinary Americans. In the meantime, the traditional political parties, barred from taking all that limitless cash, seem to be sliding toward irrelevance. They are losing their grip on the political process, political observers say, leaving motivated millionaires and billionaires to handpick the candidates and the issues. “It’ll be wealthy people getting together and picking horses and riding those horses through a primary process and maybe upending the consensus of the party,” a Democratic strategist recently told me. “We’re in a whole new world.
Democracy in action–American style–in Afghanistan
“Democracy” in action in Afghanistan is described in the NYT:
KABUL, Afghanistan — For more than a decade, wads of American dollars packed into suitcases, backpacks and, on occasion, plastic shopping bags have been dropped off every month or so at the offices of Afghanistan’s president — courtesy of the Central Intelligence Agency. All told, tens of millions of dollars have flowed from the C.I.A. to the office of President Hamid Karzai, according to current and former advisers to the Afghan leader.
How has this cash benefited anyone?
[T]here is little evidence that the payments bought the influence the C.I.A. sought. Instead, some American officials said, the cash has fueled corruption and empowered warlords, undermining Washington’s exit strategy from Afghanistan.
Yes, this is democracy in action, American Style, complete with large amount of secret cash being transferred. And this is in addition to the two billion dollars per week that we have been wasting in Afghanistan for a decade. All of this occurring at a time when American politicians claim that they don’t have enough money to provide the basics for Americans.
Congress foists weapons on army
The army says it doesn’t need new Abrams tanks, but Congress is buying them anyway. What more proof would one need that the political system is corrupt, that it is broken, that it is not responding to the needs of the American people, that we have pervasive corporate welfare?
Lawmakers from both parties have devoted nearly half a billion dollars in taxpayer money over the past two years to build improved versions of the 70-ton Abrams.
But senior Army officials have said repeatedly, “No thanks.”
It’s the inverse of the federal budget world these days, in which automatic spending cuts are leaving sought-after pet programs struggling or unpaid altogether. Republicans and Democrats for years have fought so bitterly that lawmaking in Washington ground to a near-halt.
Yet in the case of the Abrams tank, there’s a bipartisan push to spend an extra $436 million on a weapon the experts explicitly say is not needed.
Daily Show skewers U.S. resistance to gun control
The Daily Show uses the Australian decision to enact meaningful gun control legislation to show the dysfunction of the U.S.
We have lost our republic.
I just finished watching an inspiring TED talk by Lawrence Lessig, who implored:”We have lost our republic. We all need to act to get it back.”
What else can you say when only about .26% (don’t miss the decimal) of American give any significant amount to federal candidates running for office. Also consider that only .00042% of Americans (that’s only 132 people) gave 60% of the SuperPac money in 2012.
Politicians spend 30-70% of their time seeking money for reelection. This corrupts the entire political process, in that our politicians vote so as to keep their funders happy, not the people generally. Thanks to corrupt federal laws and terrible rulings by the U.S. Supreme Court, the entire political process is corrupt, and it is legally corrupt. Very few people run the political process. Lessig argues that we can no longer ignore the corruption because this tiny number of people can block any meaningful political reform on every major issue. Nothing is getting done in Congress anymore, and that is the future unless we force the system to change. thus, election reform might not be THE most important issue (there are many important issues), but it is the “First Issue.” Nothing else is going to get done unless we address election finance reform.
Reforming the system is not a conceptually difficult issue. All we need to do is make sure the funding for our candidates comes from a wider swath of people. We need to spread out the influence of the funders. There are many worthy proposals out there that do this, such as the Fair Elections Act, John Sarbanes’ Grassroots Democracy Act, or optimally, the American Anti-Corruption Act put forwarded by the Represent.us organization. All we need to do is “change the incentives.”
Lessig implores the audience: “Prove the pundits wrong. If you love the republic, act. We have lost our republic. We all need to act to get it back.” We need to restore our republic, our representative democracy, meaning “a government dependent on people alone.
I would make one additional suggestion. We should either enact a meaningful grass roots campaign funding system, or we should stop celebrating the Fourth of July. Or alternatively, until we enact grassroots campaign funding, we should celebrate the “Anti-Fourth of July.”
Not the will of the people
Tonight I received this mass-distributed email from Josh Silver of represent.us:
The US Senate just rejected a basic background check law for gun sales despite the fact that 90% of Americans support it. Even 74% of NRA members support it!1
Represent.Us has no official position on gun rights/gun control, but you’re damn right we have a position on whether America’s Congress follows the will of the American people. And they don’t. Our leaders are FAILING US, and by letting it happen, by letting them continue to steal our country, we’re failing America.
It’s time to WAKE UP. Stop writing emails to Congress. Stop yelling at your computer screen. Stop feeling hopeless.
Instead, face this simple fact: The insanity in Washington won’t end until we cut the corruption and cut the cord between Congress and the Fat Cat lobbyists who run our country.
Let’s commit ourselves to this fight. Let’s commit to creating a government of, by, and for us, the American people. The Represent.Us plan will work — if we all go the extra mile to make it work.
Tonight I’m asking you to do one simple thing: Forward this email to ten people who have not joined the fight to get money out. Tell them we must all work together on this issue, or no other issue can prevail. Tell them to become a “Citizen Co-sponsor” of the American Anti-Corruption Act by visiting this link.
The five most corrupt industries
Noah Bonn has written a succinct summary of the five “most corrupt” industries: Banking, Energy, Agriculture/Biotech, Media and Healthcare. Fair enough. These are five deserving nominations.
Rather than focus on his nominations, though, I focused on Bonn’s “solutions.” Though they aren’t complete solutions, they are mostly good ideas: Credit unions, renewable energy, local food, independent media, and “naturopaths and homeopaths.” What? I’ve written before on the huge problems with homeopaths. But that still leaves a vaccuum. What is the solution to our out of control health care system? I’d look long and hard at the solutions proposed by the recent Time article titled “Bitter Pill.”
I agree with many of Bonn’s proposals, but I do think that the problem with this slippage into homeopathy is typical with many proposed “solutions” that fall short: they are caused by the lack of even-handed skepticism. America is a huge collection of overlapping tribes, and we need to put the magnifying glass onto those people we want to like as well as those we’ve written off. In fact, I believe this need for equal opportunity skepticism, is America’s biggest need. In short, many of our problems arise from the confirmation bias.
Pay for Delay
Why is it that generic drug makers sometimes delay entering the market, sometimes long after the drug patent expires? This is another tale in corporatocracy, told by Alternet:
[I]magine you’re a big-time drug company. You want to keep competitors off the market as long as possible. Your move is to basically sue the pants off the generic drugmaker for copyright infringement, setting in motion a long and tortuous legal process. And these usually end with “pay-for-delay” deals. The brand-name drug company pays the generic manufacturer a cash settlement, and the generic manufacturer agrees to delay entry into the market for a number of years. In the case before the Supreme Court, the drug company paid $30 million a year to protect its $125 million annual profit in AndroGel, a testosterone supplement.
It’s hard to see this as anything but bribery, designed to preserve a lucrative monopoly for the brand-name drug maker. In fact, this is what the Federal Trade Commission has argued for over a decade. They consider it a violation of antitrust law, arguing that the exchange of cash gives the generic manufacturer a share of future profits in the drug, specifically to prolong the monopoly. As SCOTUSBlog summarizes from the FTC’s court brief, in the regulator’s view, “Nothing in patent law … validates a system in which brand-name companies could buy off their would-be competitors.” Indeed, everyone wins with pay-for-delay but the consumer: the FTC estimates that the two dozen deals inked in 2012 alone cost drug patients $3.5 billion annually, with the brand-name and generic manufacturers splitting the ill-gotten profits.
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