The IRS, always friendless, now is a pariah. Republicans can’t stop condemning it. Democrats can’t stop agreeing.

Targeting Tea Party groups for scrutiny, even if through incompetence, not intention, turned the IRS into a nasty carbuncle on the governing body.

Carbuncles are never good. Strength-sapping, painful, ugly, they’re to be avoided. Here’s the thing, though: while every politician in Washington is cursing the carbuncle, hardly one has complained of the cancer killing the patient. Allowing unlimited, unaccounted-for corporate spending in elections is a malignancy threatening the life of the republic. Permitting Tea Party, left-wing, libertarian, middle-of-the-road – whatever – groups to define themselves as untaxed social welfare organizations that may accept unlimited, untaxed, secret corporate gifts and sponsor political ads is a sarcoma on democracy.

Nobody wants the IRS singling out applicants based on politics. The American people do, however, want someone, if not the IRS, someone else, somewhere to do something about the perversion of election finance. The IRS is hardly a good candidate for that job. The Securities and Exchange Commission (SEC) could help. A constitutional amendment would be better.

The IRS has some regulatory power. In the Tea Party case, the IRS was examining applications for “social welfare” or 501(c)(4) status, which is commonly used to circumvent campaign finance laws.

Click here to view the video on YouTube.

Over the past decade, an increasing number of political groups sought “social welfare” status instead. That’s because of a 2001 law requiring political outfits to disclose their donors. “Social welfare” organizations don’t have to do that. Politicized “social welfare” groups sprouted even faster after the U.S. Supreme Court decided in the Citizens United case in 2010 that corporations are people free to spend unlimited cash in elections.

“Social welfare” groups provided corporations with the ability to spend untold millions on candidates while keeping that a secret from customers and shareholders.

But here’s the problem: the tax code requires these groups to work “exclusively” to promote social welfare. Regulations permit some political activity but forbid these groups from functioning primarily for politics.

Despite that, many of these groups, from the right-wing Crossroads GPS to the lefty Priorities USA, clearly operate primarily for politics. They spent hundreds of millions in the last Presidential election. Watchdog groups have filed a dozen complaints in the past two years objecting to this apparent violation. The IRS never responded.

Not much enforcement there.

The IRS made a little effort in 2011, but backed off when GOP leaders complained.

Gifts to charities are tax exempt, but those to “social welfare” groups are not. Well, they’re not supposed to be. The IRS sent letters to a group of big donors two years ago informing them that gifts to “social welfare” groups may be subject to tax. Immediately, Republican senators Orrin G. Hatch and Jon Kyl accused the IRS of partisanship. After which the IRS “folded like wet cardboard,” said Sheila Krumholz and Robert Weinberger of the Center for Responsive Politics in a New York Times article.

No enforcement there.

Another government entity that could help cure the dark money disease is the SEC.

No enforcement there either, though.

Languishing at the SEC is a proposal to require publicly-traded companies to disclose the money they pour into these “social welfare” groups – funds described as “dark money” because the source is concealed. The idea is that shareholders have a right to know how their investment is used. And it’s a popular concept, with more comments filed on this proposal than on any other suggested rule in SEC history – half a million – the vast majority in favor.

Citing the IRS scandal, Republicans demanded last week that the SEC kill the proposal to require corporations to unveil their attempts to influence elections. New SEC Chair Mary Jo White refused.

Good sign. But still no actual enforcement.

One method of enforcement is on the move. It is a proposed amendment to the U.S. Constitution that would reverse the Citizens United decision that corporations are people with First Amendment rights to free speech, which includes spending unlimited money on politics. Already, 13 states and more than 300 municipalities have called for approval of the Democracy is For People Amendment. It was introduced in Congress by Independent Vermont Sen. Bernie Sanders and Florida Democratic Rep. Ted Deutch.

It says natural persons who are citizens of the United States may make campaign contributions. Corporations do not fit that definition of human beings, and as a result would be prohibited from making political gifts.

It would allow contributions from Political Action Committees, which are comprised of human beings who get together and donate under the IRS’ political committee rules – Section 527. So groups of union members or wealthy CEOs could continue donating.

Move to Amend activists were heartened by a Pennsylvania judge’s recent decision that corporations are not people and thus do not have a constitutional right to privacy. Washington County President Judge Debbie O’Dell-Seneca is no Supreme Court justice. But she understands that there’s an important distinction in the fact that people can be heartened while corporations can’t be. Her decision included this analysis:

“It is axiomatic that corporations, companies and partnership have no “spiritual nature,” “feelings,” “intellect,” “beliefs,” “thoughts,” “emotions,” or “sensations,” because they do not exist in the manner that humankind exists. . .They cannot be ‘let alone’ by government, because businesses are but grapes, ripe upon the vine of the law, that the people of this Commonwealth raise, tend, and prune at their pleasure and need.”

Corporations can’t “suffer” illness. They can, however, kill democracy.

To stop toxic corporate interference in elections, the American people could demand that the IRS, which is supposed to be non-partisan, decide exactly what constitutes political activity. They could hope the SEC will do the right thing. What they should do, however, is pass a constitutional amendment clarifying once and for all that corporations are not human and can’t usurp the rights of human beings.

Yesterday, in response to recent IRS admissions, President Obama called the enhanced investigation of conservative groups seeking tax-exempt status “intolerable and inexcusable.”  And, Attorney General Eric Holder announced a criminal investigation into the allegations against the IRS.  But both of them are missing the point.

The scandal here is not that political groups were targeted by the IRS, it’s the fact that political groups are being subsidized by John Q. Taxpayer.  Groups that are politically motivated, and not really “social welfare” organizations, shouldn’t receive preferential tax treatment in the first place – regardless of their political affiliation.

A report by the Inspector General stated that “ineffective management” at the IRS allowed conservative groups to be targeted for over 18 months, and resulted in substantial delays in the processing of their non-profit applications.  But, the real “ineffective management” here was Congress’s failure to regulate these organizations, and enforce transparency.  And, what’s truly “intolerable and inexcusable” is the Supreme Court’s 2010 Citizen United decision, which opened the campaign-finance floodgates in the first place.

The IRS shouldn’t be apologizing for investigating phony “nonprofit” organizations, they should be investigating all politically-motivated groups who want to be subsidized by the taxpayers.  Congress has repeatedly rejected campaign finance reform, and Citizens United moved oversight from the Federal Elections Commission to the IRS.   It’s impossible to create and enforce reasonable guidelines based on an unreasonable Supreme Court decision.

The only way to really fix this problem is to amend our Constitution to say that money isn’t speech, and corporations aren’t people.  Let’s make it happen.  Join the fight at MoveToAmend.org.

Originally posted at ThomHartmann.com.

The Tennessee General Assembly is trying to subvert democracy.  Republican lawmakers in that state want to revise our election process, and give themselves the power to select which candidates appear on the ballot for U.S. Senator.  This is the latest GOP tactic to destroy our democratic process, and it’s their clever way of going around the 17th Amendment.  

Before 1913, state legislators selected U.S. Senators, but the process was ripe with corruption.  So, the 17th Amendment was enacted to give voters the power to select their leaders, and remove the opportunity for rich guys to buy themselves a Senate seat.  If passed, Tennessee Senate Bill 0471 and House Bill 0414 would amend state election laws, to let state legislators nominate candidates, and thus would likely determine who represents that state in the U.S. Senate.  As Tennessee voters are highly likely to vote Republican, it’s a virtual certainty that the GOP candidate selected by the state legislators would go on to represent that state in the Senate.

The 17th Amendment was passed to prevent wealthy men from buying off state legislators, and this new law in Tennessee would open the door to the same type of corruption all over again.  Citizens United paved the way for mountains of cash in political races…but why spend millions in campaign ads when you can simply bribe a few state legislators and achieve the same effect?

Republicans know they can’t win elections on the issues, hence their attempt to disenfranchise voters and buy off politicians.  Now they think they can simply decide who has the right to appear on the ballot.  We must stop the attack on our democratic process.  Our right to vote is our most important right, and it must be protected.

Originally posted at Thom Hartmann.

If you are reading this, you already know the national score from the November election.  The Democrats won the presidency, added two seats in the Senate, and won eight seats in the House by over 500,000 votes – while remaining in the minority.

But 2012 is old news.  Now, in Washington, focus is on the next opportunity, the next election.  In 2014, the goal for the GOP is the Senate. Republicans need six seats to overtake the current Democratic majority.  But the true prize is the presidency, coming in 2016.

Last year, Republicans tried to take back the White House and Senate by gaming the system. They failed, in their terms, because their candidate “too moderate” and several Senate candidates had“little slips of the tongue.” (Although to be fair, somevery prominent voices said just the opposite; that the Republicans made “offensive remarks” and were being “the stupid party”). The voter suppression, er, registration laws that weresupposed to turn states “red” for Romney were struck down before the election, or suspended until after this election.

However, progressives cannot rest on our laurels, and think that just because the GOP failed this time, they won’t try to manipulate their way back on top in 2014 and in 2016.  Already, lawmakers in GOP-controlled states that went blue in 2012 are talking of “hope” and “change.”  As in, “I hope we can compete in 2016 by changing the way the president is elected.”  They will attempt to do this in several ways, as outlined “from the inside” superbly in a “memo” fromthe Democratic Strategist:

• Change the electoral vote allocation system
• Learn why their massive donation advantage failed them, and use funds more effectively
• Continue efforts to lock out voters from the American political system

Subvert

The call for this change came from on high.   Reince Priebus wants Republican-controlled blue states to change the current winner-take-all electoral system, currently in place in 48 states, to a district-by-district or proportional system.  The truly maddening point of the district-by-district plan is that the two votes that come from the statewide seats would come from not the overall winner in the states, but whoever won more gerrymandered, GOP-favorable districts.

In Virginia, state Republicans voted to change this on the day they were sure to have a one vote majority; when a Democratic state senator and Civil Rights activist left Richmond on Martin Luther King Jr, Day to celebrate Barack Obama’s second inauguration. Other states considering this change include Florida, Pennsylvania, Ohio, Wisconsin, and Michigan. Notice that there are currently 30 states with Republican-control legislatures, but only six of these are being asked to change the way that they allocate electoral votes.

These proposals were met with immediate criticism from both left and right.  Obviously the Democrats would not stand for it, butRepublican Virginia governor Bob McDonnell andGOP Vice Presidential candidate Paul Ryan have come out against the proposals. (Perhaps both with an eye on 2016.)  While the attempts to change the electoral allocation system seem to be at a standstill (except inPennsylvania, where it is very much alive), there are still other ways that Republicans could subvert majority rule.

Buy

It should surprise no one that Republicans can raise more private money than Democrats.  While both sides have big donors, in last election season the heavy-hitters were on the Republican side (despite the fact that many of these billionaires still made money hand over fist during Obama’s first term).  Unless Citizens United is overturned, this advantage will persist.

The 2012 election was the first post-Citizens United presidential election. Thus, it was the first time that Republicans got to try out their new toy — unlimited campaign contributions to buy elections.  Ultimately this effort failed, though the reasons why they failed are uncertain.  Karl Rove and the leaders of other GOP super PACs must be asking themselves: “Why didn’t it work this time?”, “Where could we have spent money more effectively?”, and “How can make that money to work for us better in 2016?”

That last question that should have progressives worried.  If Democrats didn’t have a well-oiled machine like Obama for America in 2012, or a candidate who drew voters from all demographics as the president did, Mitt Romney would probably be in the Oval Office today.  I am not sure another candidate like Barack Obama exists in the Democratic Party right now, or any other party for that matter.

To compete with the money that will be thrown around in 2016, Democrats must keep the internal structure of OFA alive to raise similar funds from the smaller donors as we did in 2012. Small donations from many donors did the trick in 2008 and 2012. It must continue if Democrats are to remain victorious in 2016.

Obstruct

Another fun way that Republicans tried to change the Presidential election and elections in general, was to introduce and pass restrictive voter registration laws. The measures were designed to prevent “voter fraud” — such a big problem that a grand total of 633 cases have been prosecuted since 2000, out of approximately 350 million votes cast.  That’s 0.0000018% of votes.  It’s a small number, to be sure, but that did not stop Republicans from trying to enact these laws.

On the surface, it is perfectly reasonable that we make sure everyone who votes is registered and voting in the right district.  However, these laws did target groups that tend to vote Democratic.  Signs bearing helpful reminders such as “Voter fraud is a felony!” popped up in heavily Democratic neighborhoods.

The Brennan Center compiled arundown of all the states that considered restrictive voting laws,  and those that passed them.  Several of these laws were overturned or blunted, limiting their effectiveness in 2012. But some will still be on the books in 2016.  This means that Democrats need to either get these laws overturned, or (failing that) run campaigns to help their voters get IDs.

How to Keep on Rocking the Vote in 2016

The Republicans message after November’s shellacking was “If at first you don’t succeed, change the rules of the game so you can win the next time.”  These changes could be devastating in the absence of a candidate like Obama.  However, the Democrats still have a major advantage that’s for the American public to see:  The majority of Americans support the progressive message, and Democrats who ran on the progressive message won big in 2012.

The benefit for Democrats in continuing on this path, appealing to the majority by embracing progressive positions, seems obvious. These are also positions that the GOP cannot and will not take.

Democrats must preach a progressive message of pushing forward, whatever the circumstances.  The on the right will always try to halt that progress. This gave me pause as I watched the Inauguration. Even as the president publicly embraced progressive goals, some of those on the podium were already looking to undermine him and his party.

Voter suppression laws and the lack of big funders did not impede democracy this time around, but allowing the Republicans to change the rules in the middle of the game will.  For all Mitch McConnell’s whining over the potential changes to the filibuster, this is truly a nuclear option.

The GOP knows that they cannot compete unless they change. But instead of trying to compete, they’re trying to change. Change the rules of the game, that is.  This is more than a threat to Democrats or progressives. It is a threat to democracy itself.  At every turn, patriots believe in the vision our founding fathers passed down to us must defend that vision against these internal threats to our democracy.

Election night 2012 definitely felt like a victory for progressives. President Obama won re-election convincingly, with more than half the electorate casting ballots for the president, Democrats picked up two Senate seats and eight House seats. The fears of post-Citizens United, that several big donors, notably Sheldon Adelson and the Koch brothers, would buy their candidates their offices seemed to be allayed by these victories. The common narrative is that outside money did not matter much, as it did not statistically change who won in 2012.

While money, by and large, did not change who won on a national scale, that does not mean that money had no impact in election 2012. Money changed politics in 2012, in significant ways that you might not have noticed.

One very simple way that money has changed election victories and legal outcomes is in state supreme courts. At the state level, almost half of the states have a system in which their Supreme Court justices are elected, making them inherently political. That many state Supreme Court justices are elected is not at issue; what is at issue is the people who work to get them elected, and the fear that money can buy a vote on a state Supreme Court case.

To find an example of a group trying to buy a vote on a state Supreme Court, one does not have to look far. Before this election, before Citizens United even, there was a case in West Virginia involving a mining company suing a coal company for breach of contract. The mining company, Caperton, won a $50 million decision against the coal company, AT Massey. AT Massey appealed, and at the same time began bankrolling Brent Benjamin’s candidacy for the West Virginia Supreme Court, spending $3 million. Benjamin won a seat on the court and, when the trial between the companies came before him, was the deciding vote in a 3-2 decision for AT Massey, despite failed requests that he recuse himself.

Caperton eventually took this lack of recusal to the United States Supreme Court, where a 5-4 decision found that Benjamin’s participation in the trial violated Caperton’s Fourteenth Amendment rights. In the majority opinion, Justice Kennedy wrote:

We conclude that there is a serious risk of actual bias—based on objective and reasonable perceptions—when a person with a personal stake in a particular case had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge’s election campaign when the case was pending or imminent. The inquiry centers on the contribution’s relative size in comparison to the total amount of money contributed to the campaign, the total amount spent in the election, and the apparent effect such contribution had on the outcome of the election.

The court decided that Benjamin’s involvement in the trial, considering the amount of funds that had been raised and given by AT Massey, created an unconstitutional “probability of bias.”

It is exactly this “probability of bias” that Americans should be fighting against. Both sides of the aisle have the right to be furious about unlimited amounts of money showering judicial campaigns. Conservatives do not want the trial lawyers to purchase judges to protect “jackpot justice” any more than liberals want businesses such as Massey to be able to call in a vote whenever a case against them comes to the court. The “probability of bias” principle cited by the Supreme Court removes Justice’s blind and places a thumb on the scales of truth and fairness.

Make no mistake, money is flowing in judicial elections, and it is going in both directions. Within a month of the November elections, ThinkProgress published an article about four conservative state Supreme Court candidates who had seemingly compromising contributions to their campaigns. This week, the Center for American Progress published a full report on elected justices who had outside contributions that figured prominently in their campaigns and that might create conflicts of interest, or “probabilities of bias.”

Of the eleven justices profiled in the report, five were supported by liberal groups, and six were propped up by conservative groups. In North Carolina and Michigan, enough justices were elected to keep the control of the Supreme Court tilted toward conservatives. Michigan, you may recall, was the former union stronghold that recently enacted right-to-work laws. The winning judges also did so by small margins, and it would be tough to suggest that the money played no role in the amount of exposure that a judicial candidate had.

None of this is to say that a state Supreme Court justice definitely will be biased based on these contributions. Dale Carpenter, a University of Minnesota law professor responded when asked if the justices followed a neutral path when making their decisions: “There’s evidence that the justices do vote against their policy preferences from time to time, enough to disrupt the general narrative that they just vote their ideological preferences.” And it is not outside the realm of possibility that a justice could view a case without looking first at their campaign bank accounts. Though, if they do vote in the best interest of those that contributed to their campaigns, that would seemingly confirm the “probability of bias” that the Supreme Court ruled violated Caperton’s right to due process.

One simple way to remove potential for bias would be to do away with unlimited campaign contributions to judicial candidates. This would eliminate most of the possibility of bias, because major donors cannot give to their heart’s content. This would force the judges to cultivate a diverse donor base to have the funds to run against an opponent, and develop a strategy that uses the funds judiciously, possibly slowing the barrage of negative emails and advertisements you see during election season.

But the best way to eliminate the “probability of bias” is to remove large donor money from judicial elections altogether through “clean elections” funded through public dollars. That gets outside money out of politics by allowing those running for state office to first demonstrate their viability by collecting a qualifying number of signatures and a minimum level of contributions. The state in turn provides campaign funding, usually from a voluntary tax or fees placed upon attorneys.

This solution is far from perfect. In North Carolina, an early adopter of clean elections, all the state judicial candidates accepted public funds, and the strict rules that went with them, but also spawned a state Supreme Court super PAC, which led to the race being the one that attracted more than $2.5 million from outside groups.

The current narrative that corporate money did not get its way in this election is wrong. Big money played a significant role in the election of 11 justices whose rulings could determine the validity of laws across the country. While none of the elections and ties to donors are as egregious as the Caperton case, it would be a farce to suggest that no attention would be paid when a case comes before a judge that has had his or her coffers filled by interests that would benefit from the judge’s ruling. In the Caperton opinion, Justice Kennedy quoted himself:

“Courts, in our system, elaborate principles of law in the course of resolving disputes. The power and the prerogative of a court to perform this function rest, in the end, upon the respect accorded to its judgments. The citizen’s respect for judgments depends in turn upon the issuing court’s absolute probity. Judicial integrity is, in consequence, a state interest of the highest order.”

Our respect for the courts has eroded in part because we believe they are just going to play a role in the political squabbles we see every day in Washington, and this view is seemingly confirmed by the money judicial campaigns receive from parties interested in gaining favor. Some judicial integrity may have been lost in this election due to money. The courts can regain our trust, however, by ending judicial campaign contributions from large outside donors.

Richard Long, an intern at Campaign for America’s Future, is a recent graduate of the University of North Carolina

Are you sleeping, are you sleeping,
Brother John? Brother John?
Morning bells are ringing! Morning bells are ringing!
Ding, dang, dong. Ding, dang, dong.

Early in the morning, the day after Americans awarded him four more years in the White House, President Obama gave his acceptance speech then sought détente immediately by calling GOP Speaker of the House John Boehner and Senate Minority Leader Mitch McConnell.

Johnny and Mitch rebuffed him. They were asleep, Barack Obama was informed. They would not be rousted to speak to the likes of the President of the United States.

Then, the day after Americans voted to reject Mitt Romney’s plan to reduce the deficit on the back of the middle class, Johnny and Mitch insisted that Congress must reduce the deficit on the back of the middle class.

Johnny and Mitch need to wake up to the new reality. Ding, dang dong. Republicans lost. They lost the Presidency. They lost seats in both the House and the Senate. The American people smacked Republicans down and trounced the GOP’s darling Tea Party. Losers don’t disrespect the victors. And, Johnny and Mitch, just FYI, losers don’t dictate the terms of armistice. The victor in the 2012 Presidential election ran on a pledge not to renew those expiring Bush tax cuts for the rich. American voters validated those terms.

President Obama and Mitt Romney reveled in their differences. The choice was clear for Americans. For his part, Romney dismissed 47 percent of Americans as lazy, irresponsible “takers” and promised to decrease taxes for the nation’s wealthiest by 20 percent beyond the Bush cuts.

President Obama, by contrast, promised he would let expire the Bush tax cuts for everyone earning more than $250,000 a year, which would include himself and Mitt Romney. As Republicans carped about the nation’s debt, Obama said it was time for those who had benefited most from America to fulfill their responsibilities to their country.

Not only did voters choose President Obama and his fiscal plan, but they also said in exit interviews that those Bush tax cuts for the rich have gotta go. Here’s what an infamous number – 47 percent – told the exit pollsters about the rich: Anyone earning more than a quarter million should pay more taxes. An additional 13 percent said everyone’s taxes should be raised.

Those results are consistent with the way Americans voted on local tax measures. They increased their own taxes repeatedly on Tuesday.

Residents of California and Arkansas, San Antonio and Austin voted to pay more in taxes for specific purposes such as education and infrastructure. In Oregon and Florida, voters rejected limits on and elimination of certain taxes.

The vast majority of Americans are willing to do their part to support their country. And they expect no special exemption from that responsibility for the nation’s richest. They sent that message Tuesday through their ballot choices.

John Boehner must have snoozed through that missive. On Wednesday, after speaking with fellow Republicans on a conference call – apparently he was awake for that one – Boehner announced that he would refuse to allow the Bush tax cuts for the rich to expire.

He also said any deal with the White House to avoid the automatic budget cuts and tax increases dubbed the “fiscal cliff” that will occur Jan. 1, 2013 barring action by Congress must include overhauls to the tax code, Medicare and Medicaid.

The American people rejected all of this while Boehner was unconscious on Tuesday.

Romney chose as his vice presidential candidate Paul Ryan, who proposed voucherizing Medicare to shift costs to seniors and butchering Medicaid by shoving responsibility for it to the states. The Romney-Ryan team proposed cutting income taxes by 20 percent for everyone, including the rich, and recouping the revenue loss by closing loopholes they kept in a special secret lock box.

Non-partisan economists said this plan did not compute unless Romney and Ryan raised revenue from the middle class by eliminating deductions vital to them, such as those on mortgages. Romney and Ryan insisted they could, in fact, magically make the numbers add up without adding to the tax burden of the middle class.

But they refused to disclose that super-secret formula. For some reason, the American people didn’t believe them. They chose President Obama instead – the guy who flat out said he’d raise taxes on the rich and whose health care law broadly expands Medicaid. They chose the guy whose vice president pledged that the administration would not cut Social Security.

Thanks to the right-wing Supreme Court’s Citizens United decision allowing unlimited contributions to super PACs, a handful of the nation’s richest – including Kenneth Langone, founder of Home Depot; billionaire industrialists Charles and David Koch; gambling kingpin Sheldon Adelson; Chicago Cubs owner Joe Ricketts; Texas industrialist Harold Simmons, and Texas homebuilder Bob Perry – spent hundreds of millions in an attempt to buy a President for themselves.

They failed. The feet of hundreds of thousands of volunteers beat them. Jonathan Collegio, the spokesman for one of those Republican super PACs, American Crossroads, admitted it. He told reporter Amanda Terkel at Huffington Post:

“If you look at the exit polls, the way that Obama won was on the ground in Cleveland with a lot of the minority voters. . .I just don’t know that’s a job for super PACs.”

The voters who re-elected President Obama celebrated on Tuesday, rested on Wednesday, then went back to the streets on Thursday. They demonstrated at more than 100 sites across the country to demand protection for Medicare, Medicaid and Social Security, to demand that some stinking “grand bargain” to avoid the fiscal cliff does not include cuts to crucial programs promised the middle class. They re-elected President Obama and now they going to make sure he can keep his promises to them.

Hey, John Boehner: Morning bells are ringing. And if Republicans don’t wake up and listen to the middle class, what they’ll hear is mourning bells tolled after they lose even more seats.

In the words of the old spiritual, “My Lord, what a morning!” Barack Obama’s 2008 campaign was defined by an iconic poster bearing the single word: “Change.” Obama’s victory in 2008 signified how much America had already changed enough to make his historic campaign and audacious victory possible.

Four years later, President Obama’s re-election adopted another one-word theme: “Forward.” Obama’s successful bid for reelection, along with significant victories for Democrats, and historic outcomes on some high-profile ballot initiatives suggest that the country has changed even more in the past four years — in ways that could give Democrats a long-term advantage over Republicans on social issues and economic issues. 

Following an election that was often described as a choice between two different visions of America that would determine what kind of country we will become. We may not be “there” yet, but these changes show that we are a nation in progress.

Social Issues

For the first time in recent memory, social issues were a liability for Republicans and an asset for Democrats on at least two issues.

The biggest news after Obama’s reelection is probably the LGBT community’s historic victories on marriage last night. For the first time, in every state where the issue of marriage equality was on the ballot, anti-equality conservatives lost and equality advocates won in a four-state sweep.

• Maine made history when voters approved a measure to legalize same-sex marriage — reversing a 2009 vote that defeated marriage equality. Before Tuesday, no other state had approved marriage equality by popular vote, rather than through court rulings or legislation.
• Possibly tying with Maine, Maryland voters approved a ballot measure approving same-sex marriage. Anti-equality activists pushed the measure to a referendum after both houses of the state legislature approved it and the governor signed it.
• In Minnesota, voters rejected a constitutional amendment to deny same-sex couples the right to marry.
• If the trend continues, Washington state voters are on track to approve a law recognizing same-sex marriage, which passed earlier this years.

It’s an amazing turnaround, considering that just four years ago the celebration of Obama victory was — for his LGBT supporters — overshadowed by the passage of California’s Proposition 8, which reversed a court ruling in favor of marriage equality. The defeat, one in a streak of 32 losses, was made even more bitter by then president-elect Obama’s “evolving” (but non-supportive) position on marriage equality. “Yes, we can,” became “No, we can’t.” A year later, Maine followed California’s lead.

Four years later, Proposition 8 has been ruled unconstitutional, Maine reversed it’s 2009 vote, two states became the first to approve marriage equality by popular vote, and a fourth is likely to join that number. What happened?

Earlier this year, President Obama made history and completed his “evolution by declaring his support for marriage equality. Democrats followed Obama’s leadership, adding support for marriage equality to the party platform. Obama’s evolution was made possible by the work of marriage equality activists carried the rest of the country forward.

Yesterday, the President of the United States voiced his support for equal rights and protections for my family. That’s a civil rights milestone the likes of which we haven’t seen since the LBJ. From “We the people,” to “Yes, we can,” what has made America truly exceptional are the progressive movements that worked to ensure that more and more of us are included in that “we.”

Maybe the president didn’t really “evolve” at all. Maybe all that changed is that making his personal convictions public is less of a political risk than it was.

Again, I don’t care. The important thing that we evolved — those of us who made commitments to each other, and set about creating our families without waiting for the rest of the world to catch up. We have evolved, and have brought the rest of the world with us. Now, that includes Barack Obama.

We evolved, and the country is evolving with us. If it’s politically safer to support marriage equality now, because public support for marriage equality has increased rapidly in a just a few years, it’s because we made that happen. We evolved and have brought the country with us, one commitment ceremony or PTA meeting at a time.

The margins of victory in the ballot measures roughly reflect the percentage of Americans who support same-sex marriage. Thus, in 2012, supporting marriage equality doesn’t seem to have hurt Obama and the Democrats. In fact, it probably helped put LGBT Americans more solidly in the Democrats winning coalition.

It wasn’t just marriage. An Iowa judge targeted for ruling in favor of marriage equality kept his seat. Colorado’s House and Senate will see its first openly gay leaders sworn into office. And of course, Wisconsin Democrat Tammy Baldwin made history by becoming the first openly gay U.S. Senator, and her vacated House seat was won by openly gay Democrat.

When the Republican primary turned into a debate about contraception, Republican presidential wannabes fell over each other to position themselves against it. It only got worse.

Rush Limbaugh called Georgetown University student Sandra Fluke and all other women who use birth control “sluts.” Rick Santorum’s financial backer, Foster Friess suggested women who wanted contraception place aspirin between their legs, “so they won’t open them.” National Review columnist Kevin D. Williamson published a bizarre screed reducing women to a set of biological and reproductive drives that made Mitt Romney their ideal candidate. 

It got even worse. 

Five Republican senate candidates stirred up even more controversy with inflammatory comments about abortion and rape.

• Missouri senate candidate Todd Akin got the ball rolling when he asserted that rape survivor didn’t need access to abortion, because pregnancy rarely results from “legitimate rape,” because a woman’s body “has ways of shutting that whole thing down.” In an attempt to clarify his remarks, Akin defended his use of “legitimate rape”  because some women make false claims of being raped.
• Richard Mourdock, the GOP’s candidate for Indiana’s senate seat, said rape survivors shouldn’t have access to legal abortion because their pregnancies are “a gift from God.” The same week Mourdock made his comments, Mitt Romney aired an ad endorsing his candidacy.
• Connecticut Republican Linda McMahon revealed her belief that Catholic hospitals should be able to deny women emergency rape contraception, due to “separation of church and state.”
• Pennsylvania senate candidate Tom Smith put a personal spin on the issue, explaining his support for denying women emergency rape contraception by saying he could “personally relate” because his daughter had a child out of wedlock, and saying that it had a “similar effect” on him as a father as a pregnancy that resulted from rape would. 
• Washington state’s John Koster kept it simple, saying that he opposed abortion access for rape survivors because it would only serve to “put more violence on a woman’s body.”

Economic Issues

In his New York Times column, “Values, Not Demographics, Won The Election,” Joel Benenso dismisses an idea I’ll get to a bit later: that an increasingly diverse America fueled President Obama’s reelection victory. Instead, Benenso says Obama’s success was due to an economic message that spoke to most Americans.

The president’s victory was a triumph of vision, not of demographics. He won because he articulated a set of values that define an America that the majority of us wish to live in: A nation that makes the investments we need to strengthen and grow the middle class. A nation with a fair tax system, and affordable and excellent education for all its citizens. A nation that believes that we’re most prosperous when we recognize that we are all in it together.

…Moreover, Mr. Obama’s strength on the economy was not about “empathy,” as many experts asserted. Rather, for average working-class and middle-class Americans who have believed for nearly a decade that the economic system in America had fallen out of balance for people like them, the president’s personal story and policies engendered trust because they connected with voters’ lives, aspirations, and beliefs about what it would take to create the future they wanted. That trust was the central economic test in this election.

That is why, despite the credit given to Mr. Romney for “understanding” the economy — a phrasing that spoke to a technical understanding — Mr. Obama was always significantly more trusted on qualities that matter to working Americans. In fact, independent voters in our survey, by 54 to 40, said it was more important for a president to have “the willingness to fight for middle-class families” rather than a “technical understanding of the economy.”

Benenso may be on to something. In his victory speech, Obama ended this campaign with the same populist rhetoric he started with in 2008 (and that served him well in 2004). But in many ways, as Michael Grunwald noted, Obama’s deeds as president had greater impact than his words.

Obama is a politician, but he really did make it a point of pride that his administration would focus on getting the policy right and letting the political chips fall where they may. Sometimes that turned out to be dumb. For example, his stimulus cut taxes for 95% of Americans, but less than 10% of them noticed it, because his economists recommended giving them a few dollars a week through reduced withholding instead of writing them fat checks as President Bush had done. His chief of staff at the time, Rahm Emanuel, complained that the president was denying himself an “Ed McMahon moment,” the squeal of Publishers Clearinghouse pleasure that would accompany a check from Obama, and he was right.

For the most part, though, Obama’s focus on policy led to a lot of policy change. His $800 billion stimulus became a national joke, but it launched a quiet clean energy revolution, dragged our medical system into the digital age, launched the most ambitious education reforms in decades, and saved the country from a depression. The political smart set warned that Obama was committing political suicide by focusing on health care instead of jobs and letting his reforms languish in Congress for months. But he plowed ahead, and achieved the longstanding Democratic dream of near universal health insurance.

The original rap on Obama was that he was a words guy, but he turned out to be a deeds guy, better at achieving than marketing his achievements. He’s done a lot, from Wall Street reform to student loan reform to the repeal of Don’t Ask Don’t Tell, and quite a bit of it was politically risky. He took more political risks in Afghanistan and Libya and the fight against al Qaeda. He criticized that white cop who arrested Henry Louis Gates, regulated coal plants in swing states, and dropped his opposition to gay marriage. And what were the consequences? A 50% approval rating in a 50-50 nation, even though unemployment remained high throughout his term. Would he would have been any more popular if he had punted on health reform, as so many pundits advised?

In addition to reelecting President Obama, voters rewarded candidates who fought against inequality — Democrats and Republicans. Of the twelve House members awarded an “A+” on the International for Policy Studies’ inequality report card, eleven won their races. Three of the five Senators who scored top marks — Sherrod Brown (D, OH), Bernie Sanders (D-VT), and Sheldon Whitehouse (D-RI) — won reelection. Meanwhile,  many “middle-class zeros” were defeated, and a number of progressive candidates won. 

If the president’s words and deeds spoke to Americans’ deepest concerns, American’s let their votes speak for them in ballot initiatives that reflect the values that define an American they want to live in. 

• Alabama voters defeated a stealth constitutional amendment that would have eliminated the constitutional guarantee to of a right to a public education.
• California voters:

• passed a ballot measure to increase taxes on people earning $250,000 or more, and earmark the revenue for public schools and college;
• defeated a measure that would effectively stop unions from making political contributions; and
• passed a measure that closes a loophole that allowed businesses to avoid paying state taxes;

• defeated an amendment that would have capped state revenue based on population, and could have kept government services from keeping up with demand; and
• defeated an amendment prohibiting the use of public funds for abortions, except when required by federal law, or when a woman’s life was endangered.

• rejected a proposal to eliminate the estate tax in their state; and
• approved a measure that  diverts funds from the corporate kicker tax, which is a rebate to corporations and individuals given during a revenue surplus, to a fund for public schools.

In many cases, the outcome of votes on these ballot measures and amendments was a defeat for the conservative American Legislative Exchange Council (ALEC), which had a hand in designing many of the defeated measures. 

The forces and phenomena that shaped the 2012 election will likely be the subject of debate for years to come. The result, however, seems clear. Democrats emerge from 2012 with their strongest mandate yet for bold, progressive action.

Indeed, we are a nation in progress. American voters themselves took the lead in 2012. With their votes for candidates who’s populist and progressive messages spoke to their value, and their votes on ballot measures and initiatives closer to home, American voters have shown the way … well … “Forward.” The party and candidates that follow their lead will probably be rewarded with their votes for many elections to come.

Recently my friend and colleague Bill Scher challenged progressive critics of President Obama’s conciliatory approach toward corporations with a New York Times op-ed entitled “How Liberals Win.” Far from being “business as usual,” Bill writes, “the Supreme Court’s upholding of Mr. Obama’s health care law reminds us that the president’s approach has achieved significant results.”

Bill argues that, critics notwithstanding, ours is not “a system paralyzed by corporations.” He adds: “The most liberal reforms in more than 40 years have been brought about because Mr. Obama views corporate power as a force to bargain with, not an enemy to vanquish.”

Sorry, Bill. I’m with those who have concluded that the Obama White House has failed, both pragmatically and politically, on a number of key progressive issues. In my view, believing otherwise requires an almost ahistorical view of liberalism. We can’t preemptively limit the definition of “liberal victory” to whatever corporate interests will allow.

Wherever the truth lies, the road ahead is clear: We can’t allow the radical right to take power this year. But we need to fight for results, not politicians, by building a mobilized and truly independent citizens’ movement.

Young and Estranged

This is an important discussion, especially in an election year in which liberals should be terrified. A Romney Presidency and increased Republican control on the Hill would endanger much they hold dear, including representative democracy, our social safety net, and workplace rights. And yet the outcome of this election may depend on the ability to mobilize precisely those voters who believe, not unreasonably, that the Obama Presidency represents “business as usual.”

That may not be easy. Youth voters helped propel Obama into office and handed Democrats the House of Representatives. But youth turnout was lower in 2010 than in the previous off-year Congressional election of 2006, meaning they’d been more turned off in the preceding two years than they had been turned on by Obama.

To be sure, they still favor Obama over “generic” Republicans by a wide margin. But a poll which otherwise bodes well for Obama shows that young voters’ enthusiasm has diminished considerably since 2008.

Why? Here are some clues: Another poll shows that three out of four young voters consider unemployment a “critical” issue. Obama’s jobs messaging was ambiguous for years, at best, promoting jobs-destroying deficit panic as he “bargained” with corporations and their political representatives.

Three out of four young people also believe our economic system unfairly favors the wealthy, while a plurality of them feels their generation will never achieve the American Dream reached by those who came before. The President’s rhetoric has improved on these issues in recent months – but that’s precisely because independent progressives and the Occupy movement refused to believe that dealmaking with corporations was a “win.”

The Dispossessed

It’s a similar story with middle-class voters who struggle with unemployment, stagnating wages and growing wealth inequity, retirement insecurity, lost home value, and tax laws which help the wealthy avoid paying their fair share. Who’s speaking for liberals on the economy?

And let’s be clear: By “liberals,” what we really mean “most Americans.” Take Social Security and Medicare: Poll after poll has shown that most Americans oppose their benefits to balance the budget. And yet, through his Simpson/Bowles Deficit Commission and on numerous occasions afterward, the President has opened the door to doing precisely that.

Most Americans want more government action on jobs, yet the President has offered only weak job proposals – and tempered even those with tax cuts that muddy his own message and lave the public confused.

As our own analysis showed, more than twenty million voters live in underwater homes. There, too, the President’s corporate-friendly agenda has limited his ability to connect with disaffected voters. These homeowners have been tormented and exploited by the Administration’s own HAMP program, which is now better known by the name “extend and pretend.”

Obama’s Wall Street-friendly approach may be netting him a lot of banker contributions again this year, but a recent poll shows that independents in crucial swing states believe the President has mishandled the mortgage crisis and isn’t holding Wall Street bankers “accountable” for their role in the housing crisis.

And when it comes to taxing the wealthy, the President has opted for the milquetoast Buffett rule (Is that the most Warren Buffett should be asked to chip in – the same rate as his secretary?) rather than making the case for truly progressive taxation. On all of these key issues, the President’s corporation-placating agenda has hamstrung his ability to connect with key voters the way he did in 2008.

Sure, the President’s popular. But there’s a difference between approval and votes. The difference is turnout.

Driving Turnout

There are two possible ways to get these voters to the polling booth: One is to convince them that the Obama Presidency has been a great liberal success. That’s the approach taken by my friend Bill, undoubtedly because that’s what he believes. Will that bring young voters, the unemployed, underwater homeowners, and other disenchanted citizens to the polls? That means convincing them that what looks like defeat – burdensome debt, foreclosed homes, prolonged joblessness – is really victory.

Good luck with that.

The other approach, which I believe is both more accurate and more effective, is to explain two very important things to them: that the GOP will cause enormous harm if it gains more political power, and that neither a President nor a party will fight for what’s right – or even what’s popular – without relentless pressure from an independent and mobilized activists.

It didn’t have to be this way. Had the President made different decisions, these voters could have been energized over the last three and a half years by hearing clear and forceful arguments in their favor. He could have used his bully pulpit to explain the extent of Wall Street’s crimes and then used his Justice Department to investigate them. By viewing “corporate power as a force to be bargained with,” Obama chose instead to sacrifice the principle of “one law for all.” That alienated voters while leaving our economy at risk.

But what’s done is done. That means there are two ways to get out the progressive vote in November: either to pretend that the Obama Presidency has been a victory for progressive values, or to build a movement that will fight for deeper change.

Winning?

The health care bill which Bill touts as a liberal triumph is a perfect case in point. I don’t envy Democratic leaders who must defend it against charges that it contains tax increases – because it does. Some of those taxes, like the surcharge on high earners, would actually be quite popular if the President chose to explain it clearly. Others are un-progressive, unjust, and unwise – and directly contradict the President’s campaign promises.

The RIght’s “big lie” of the week is its claim that the health bill contains “the largest tax increase in history.” It’s not even close, and its biggest increase is for those who earn more than $200,000 per year. But middle-class families will take a hit when the law raises the limit for deductible medical expenses to 10 percent of adjusted earnings, up from its current 7.5 percent. Rule changes for health pending accounts will also increase the tax burden for some middle class families.

And they weren’t all the result of compromises with corporate power, either. A case in point is the excise tax on higher-cost health plans, which is based on ivory-tower economics and will punish people economically for belonging to health plans whose demographic cost drivers they can’t control. he President aggressively fought for the unpopular excise tax – one of the few provisions he personally fought to include in the bill – despite campaigning against it in 2008.

Public Option, Private Deals

Then there’s the individual mandate, which will affect very few Americans but will nevertheless impose a financial penalty on middle-class and lower-income people. The President asked for trouble when he jettisoned the public option early on in secret negotiations with for-profit health providers.

The public option (a Medicare buy-in for people under 65) was popular across the political spectrum – 51 percent of Republicans supported it, according to polling – and it provided a ready answer for Americans (liberal and otherwise) who were outraged at the idea of being forced to buy a private insurance product that offers inadequate coverage and lousy services at exorbitant prices.

That answer? You can always choose the public option instead.

Instead the President cynically chose to keep backing the public option publicly, long after he’d traded it away privately. But he did so in a lackluster manner that quickly made it clear to some of us that he had made some sort of deal with someone, somewhere. He damaged both himself and liberalism with this approach, by undercutting his personal credibility while failing to champion progressive principles.

The Right Proposes, The Left Disposes

The most direct message Obama sent to Congress as healthcare deliberations began was this one: “I am not the first President to take up this cause, but I am determined to be the last. “To cynical parliamentarians that sounded very much like this: I’ll sign pretty much any health care bill you send my way.

The way in which the President got his health care bill passed – which mostly involved letting conservative Democrats parlay with Republicans, then failing to win Republican votes anyway – carried the seeds of troubles yet to come.

The end result was a bill whose key provisions were developed by the conservative American Enterprise Institute an enacted into law by Republican Governor Mitt Romney in Massachusetts.

Here’s a question: Is it a liberal “win” if Democrats enact policies in 2010 that were first proposed by conservatives in 1993?

Medicare For Almost

Bill Scher points to legislative triumphs of the past, like Medicare under Lyndon Johnson, as proof that dealmaking with the powerful gets results. But Johnson never abandoned the rhetoric of liberalism, even when he sacrificed some of its goals in pursuit of the best achievable outcome. On far too many occasions Obama has abandoned that rhetoric.

The President has also treated progressives inside and outside his party with scorn that borders on contempt. “Sanctimonious,” he called them, and “purists” who would be “without victories.”

And yet, as some of us predicted at the time, a more “progressive” outcome would have been far more popular than the one he got. Obama’s push for unpopular provisions like the excise tax wasn’t politically expedient. It was the result of his own choices, by all the evidence, and not the product of political necessity. He owes the left an apology, and more attention to its advice, now that it has proved to be prescient on so many issues.

Obama’s defenders defend the healthcare bill’s weaknesses by pointing to the improvements made to Medicare since it was initially passed. But could those improvements have taken place if LBJ had dismissed their importance during Medicare’s initial passage?

There’s no evidence that the President tried to win liberalism’s battles before trading them away for the sake of expediency.There are many ways to lose a battle, but the most important one of all is this: First you must try to win it.

The Long View

Something else is missing from the “How Liberals Win” approach: a long view of liberalism. Obamacare’s a textbook example, since it was first proposed as a conservative alternative to “Hillarycare” (itself a cumbersome compromise with corporations) in the early 1990s.

Yes, its passage was “historic” in several ways, at least one of which was ironic: Had Democrats agreed to support this conservative proposal in 1993, when Republicans like Warren Rudman were introducing it in the Senate, it would be approaching its twenty-year anniversary.

That doesn’t make it a bad bill or mean it’s worse than nothing, but it illustrates something very important: While liberals focused on a narrow, short-term definition of “winning,” conservatives took a longer view. As a result, conservatives have moved the national dialog radically rightward while liberals frantically shift their definition of “winning” accordingly. A “liberal win” is apparently now defined as the passage of a conservative proposal, as long as it’s better than nothing and is signed into law by a Democratic President.

If this keeps up in a few years we’ll be celebrating passage of the Romney/Ryan Medicare voucher plan as yet another “liberal win.” Didn’t America’s seniors get something? And didn’t a Democrat sign the bill?

The health care bill does some good things, but it also contains many flaws and weaknesses. Bill Scher’s engaging in faith-based reasoning, as anyone does when suggesting that the outcomes the President got were the best that anyone could have achieved. Like most professions of faith, that statement can neither be proved nor disproved.

But even if it’s true (which we doubt), these outcomes could have – and should have – been accompanied by stronger rhetoric, by clearer defenses of the good things that were being sacrificed and a pledge to work for them again in the future. That didn’t happen, and we’re all paying the price.

Parallel Universes

On issue after issue, President Obama adopted positions that would have been considered center/right Republicanism in previous decades: Over-emphasizing the urgency and importance of deficit reduction. Willingness to cut Social Security benefits to balance the budget. Minimal or destructive action regarding underwater homeowners. Claiming that “Wall Street and Main Street rise and fall together” while failing to investigate criminal bank activity. (And this list doesn’t include civil liberties issues, since the topic is economics.)

Would a more progressive Obama be in a stronger political position today? That gets into alternate-history scenarios that can never be proved or disproved. He might have met with more corporate resistance to his agenda – although its hard to imagine much stronger resistance than we’re seeing now, despite his many concessions – and his donations from Wall Street and other large donors would have undoubtedly been smaller. That’s not trivial in this post-Citizens United world, and we understand that.

On the other hand, a truly progressive President Obama would presumably be enjoying the enthusiastic backing of the core voters who propelled him to the Presidency in 2008. Would a more progressive economic agenda have been a net political advantage? We can’t know.

But isn’t it about time a Democrat tried it? Clinton’s corporate-friendly agenda including the repeal of Glass-Steagall and the deregulation of Wall Street. Obama’s corporate-friendly agenda left his party vulnerable to a GOP attack on the left over Medicare, wounded his party’s brand as the defender of Social Security, and tainted him as too cozy with Wall Street. How that workin’ out?

And here’s something we do know: The passage of better bills would have been better for the country.

The Way Forward

One thing is clear: Victory for liberalism cannot and must not be defined by the limits of what legislators can accomplish. Legislators operate within the realm of the politically possible, while independent movements change what’s politically possible.

One of the President’s greatest failures over the last three and a half years is that he chose to think like a legislator, not a leader. And one of liberalism’s greatest failures was allowing so many people to identify with a leader, not with the principles and values that should be a movement’s guiding star.

We can’t change the past, but we can learn from it. We know that we need to think both short-term and long-term. We know now that electing persuadable politicians is the first step in the change process, not the last one. (Sure, re-elect them, as long as we can pressure them. But don’t confuse tactics with strategies, compromises with goals, or politicians with ideals.)

Most of all, we know that we need a vigorous and truly independent movement – one that will speak to disaffected voters like the adults they are, mobilizing them with honest talk about the limits of elected leaders, the power of a engaged citizenry, and the perils of outsourcing ultimate accountability to any politician or party.

That, and not attempting to put a positive gloss on inappropriate compromises, is the way forward. That’s the right path, and the pragmatic path, for liberals to take – this year, and in the years to come.

A recent court case proves what many of us have long suspected: Big banks have been ripping off this nation’s towns and cities for years in an old-fashioned racketeering scam. We ran some numbers to see how much this criminality might have cost the American people.The answer? Billions.

That’s billions that might have been used to educate our children, pave our roads, and protect us from crime, disease, and fire. Will somebody take this investigation as high in these organizations as it needs to go, pursuing the truth wherever it may lead?

The Unindicted

You might call that a delicate subject in some circles. The convicted felons worked for GE Capital, which was allowed to retroactively declare itself a bank so it could be rescued by taxpayers. GE’s CEO, Jeffrey Immelt, was tapped to head the President’s Jobs Commission.

JPMorgan Chase was also implicated in this bid-rigging case. Its CEO, Jamie Dimon is frequently described as “America’s favorite banker” – most often by himself or his publicists – and politicians of both parties flatter and kowtow to him. Yet another was Bank of America, whose CEO Brian Moynihan is often characterized as … well, this is a family publication. But Bank of America was probably the worst of the corporate felons in the mortgage fraud scandal.

The crimes in this case were committed between 1999 and 2006, well into the period when both Dimon and Immelt were leading their respective organizations. We’d like to know if prosecutors in this case use the tactics that have worked so well against the Mob, by pressing these low-level employees to turn state’s evidence and testify against the higher-ups. And each of these CEOs was required by Sarbanes-Oxley to certify that he has personally reviewed the anti-fraud measures in his own company and found them adequate.

The question we need answered is a time-honored one: What did these CEOs know, and when did they know it?

The Crime

Matt Taibbi has a new piece in Rolling Stone called “The Scam Wall Street Learned From the Mafia,” by which he means bid-rigging on municipal contracts. Taibbi points out that the wiseguys have fixing things like a city’s paving bids, and anybody who didn’t play along might wind up under the pavement instead of pouring it.

Convictions in a recent case called The United States of America v. Carollo, Goldberg and Grimm illustrate the banks’ municipal bid-rigging racket. A town or city would hire a firm – in this case, a GE Capital subsidiary – when it wanted to issue a municipal bond. These bonds are often issued for projects which take a number of years to complete. Since cities don’t spend all the money right away, part of the “competition” part of the process involves seeing who can offer the best interest rates while the money’s waiting to be spent.

That’s where the rigging comes in. The defendants made sure that the interest rates quoted were all higher than the municipalities would have received under true competition so the difference could be skimmed off.

Officials in the Justice Department, along with a host of bank-friendly journalists, keep saying it’s too hard to get convictions in for bank fraud. This verdict proves that they’re wrong. The mechanisms for fraud may be complicated, but the crimes themselves are often easy to characterize. Here’s a one-sentence description of this case:

Cities and towns thought they were received competitive bids for the best available rates, but the bid process was rigged so that crooked bankers could skim money off the top.

That wasn’t hard, was it?

The Trial

Taibbi has some authorial fun drawing on the colorful, old-school nature of what sounds a lot like an old-fashioned racketeering trial. They even played audio recordings of the defendants plotting their crimes. Audio! How retro can you get? He writes:

In the manner of old mob trials, Wall Street’s secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices … on tape after tape these Wall Street crooks coughed up phrases like “pull a nickel out” or “get to the right level” or “you’re hanging out there” – all code words used to manipulate the interest rates on municipal bonds …

How much might have been stolen this way? Taibbi again:

By shaving tiny fractions of a percent off their winning bids, the banks pocketed fantastic sums over the life of these multimillion-dollar bond deals … (C)onsider this: Four banks that took part in the scam (UBS, Bank of America, Chase and Wells Fargo) paid $673 million in restitution after agreeing to cooperate in the government’s case. (Bank of America even entered the SEC’s leniency program, which is tantamount to admitting that it committed felonies.)

A number of other firms were implicated in the case, too, including Goldmans Sachs and AIG. Writes Taibbi:

(S)ince settlements in Wall Street cases tend to represent only a tiny fraction of the actual damages (Chase paid just $75 million for its role in the bribe-and-payola scandal that saddled Jefferson County, Alabama, with more than $3 billion in sewer debt), it’s safe to assume that Wall Street skimmed untold billions in the bid-rigging scam.

Billions? I thought I’d pull some publicly available municipal bond data to see if that could possibly be true.

The Big Haul

Municipal bonds are a $3 trillion-plus market, and Taibbi’s right when he says it’s a complicated one. But the basic structure isn’t. There are three types of municipal bonds: competitively bid bonds, like the ones in this case; negotiated bonds, and private placements. Based on past experience, it’s safe to assume that the banks have cheated in all three categories. But even if we limit our universe of bank cheating to competitively bid bonds, we’re still talking about a market of roughly $1 trillion (in bonds that were issued between 1996 and 2011).

We used some data from a trade organization called the Securities Industry and Financial Markets Association, or SIFMA, and looked at the average length of the bonds from issuance to maturity (along with some other details that would bore most people) to get a rough sense of how much could have been stolen over the last fifteen years or so.

Here’s what we found: If interest rates were artificially lowered on all of these bonds by ten basis points, as was done in one of the bids in this case, that would have cheated America’s towns and cities out of $82 billion dollars in the years between 1996 and 2011.The “nickel” skimmed in another case would have cost our cities $41 billion.

That’s a lot of money. Our money.

The Rackets

Not all bids were necessarily rigged, of course, and some may have been rigged for less (as some of the bids in this case were).Others may have been rigged for more than that. But when you’re looking at these numbers, remember: The rackets are much bigger than this one scam.

There are many other forms of financial fraud, and some of them may have been arrayed against these towns and cities when they were issuing non-competitive bonds as well. States also issued bonds. In one well-reported example, Goldman Sachs took a fat fee for issuing a California bond, while at the same time secretly robbing it of value by encouraging its clients to bet against California’s bond. That drove the value of the bond down and most likely cost the state tens of millions of dollars.

Then there’s JPMorgan Chase’s sewer bid-rigging cost Montgomery County, Alabama up to $3 trillion. It’s worth noting that this case did not involve competitive bidding, which shows how broad the scope of bank bid-rigging fraud could have become. And then there are the various forms of investor fraud perpetrated during the housing bubble, which affected government investors as well as private ones.

All in all, state and local governments undoubtedly lost billions of dollars, and perhaps tens of billions, as a result of bid-rigging and other fraud by major financial institutions. That’s billions of dollars for hospitals. Billions of dollars for schools. Billions of dollars for roads, buildings, important public services.

And billions of dollars for jobs.

It’s clear from the behavior of the defendants that they never expected to be punished for behavior that they considered common in their own workplace. Why should they? Each of their institutions had been operating like a criminal syndicate for years.

Priors

There isn’t room enough to go into all the misdeeds committed by these serial corporate offenders, so we’ll just offer a few examples:

GE Capital: What an outfit! Committed investor fraud and bank fraud in which senior individuals in the Accounting Department were identified as the perpetrators, but were (not so) mysteriously never indicted. Paid a fine for, in the SEC’s words, “knowing or reckless fraudulent activities resulting in numerous materially false and misleading statements or omissions … conducted (which) involved fraud, deceit, or deliberate or reckless disregard of regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss, to other persons.”

Other GE priors include misdeeds such as: Illegally concealed payments to its former CEO. Paid $23.4 million in fines for illegal kickbacks to Iraqi officials under the Oil For Food program. Purchased a subprime lender which, according to published reports and analyses, had already engaged in highly suspect and probably fraudulent activities, then intimidated or demoted whistleblowers so that the fraud could continue.

Here’s another piece of Mob-like color, from Michael Hudson’s fine reporting on the GE/subprime story:

“What GE got … was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans … earn(in) a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys.”

JPMorgan Chase’s rap sheet is lengthy, too: Bid-rigging in Alabama. Investor fraud in Florida. Other offenses such as mortgage and foreclosure fraud (tax evasion, perjury, forgery) through the use of “Burger King kids” to mass-produce false documents. It’s SEC investigation for fraudulently understating the impact of its multi-billion-dollar London losses, which Dimon first called “a tempest in a teapot.”

Bank of America: Essentially admitted it had committed fraud in municipal bond bid-rigging once before, back in 2010, and paid $137.3 million in fines. Violated bankruptcy law by illegally seizing the deposits of Lehman Brothers. It was fined for investor fraud in illegally concealing $6 billion in payouts to employees, and fined again for deceiving investors by hiding losses in its Merrill Lynch subsidiary.

Now comes this latest conviction, which directly implicates these three institutions along with a host of others. When can we expect the investigations of the big boys behind these organized rackets?

The Fix

The answer? Not soon, unless people demand it. The statute of limitations on many of these crimes has run out already, or is running out in the near future. The bank’s CEOs are politically connected, and they’re more politically powerful than ever in this post-Citizens United world.

These convictions are not enough. This case has provided concrete evidence that these low-level bankers were colluding with executives at other major banks. How high up the reporting chain did the criminality go? Did CEOs tell the truth in their annual reports?

The Administration’s indifference to prosecuting bankers seemed to change with the claim that it was ramping up of the Mortgage Fraud Task Force, but even that relatively narrow inquiry seems to have foundered in fingerpointing and apathy. Unless it shows results soon, another avenue for justice will apparently have closed.

What’s more, there appears to have been some sort of immunity granted to institutions, and possibly to executives, in the pursuit of the Carollo case.

Taibbi deserves a lot of credit for being the only reporter to give this story in-depth coverage, and Rolling Stone deserves equal praise for publishing it. But the low-level coverage given by most other outlets shows us how little our journalists, much less the public at large, understands what’s going on. And without coverage, people won’t demand investigations.

Note that we said “investigations,” not “indictments.” We can’t know whether or not any individual executives should be indicted unil there’s an investigation. The leaders of our major banks may not be dishonest. They may just be incompetent executives who lack the managerial skills needed to end the rampant lawbreaking in their own organizations.

If so, they deserve the opportunity to clear their names.

Meanwhile, the Carollo conviction was something of a fluke in our current system. The big fish are slipping away and even the little fish are, for the most part, still swimming through the net. That’s tragic. Unless citizens hammer their leaders in both parties, demanding an immediate and thorough investigation of bank criminality, the kingpins will have learned the real lesson of this story:

Crime does pay, and it pays big.

Will Mitt Romney create jobs and help our economy, or will he just take us back to the Bush-era, send-jobs-to-China destruction that made him rich? With Romney there is no way to connect what he says with what he means or might do. So we are forced to read tea leaves and look for signs. Should be reading Chinese tea leaves?

The Fire Sale Of Our Economy

Mitt Romney made his huge fortune partly by taking over companies, sending the good-paying American jobs to places like China — or using the threat to do that to force wage and benefit cuts — and keeping that money for himself and his business partners. A Washington Post story says that Romney’s company not only took advantage of this technique, but actually helped pioneer the technique!

While Romney and those like him became enormously wealthy from this since-Reagan fire-sale of American factories, companies, industries and technologies, our economy suffered terribly. Working people’s wages stagnated and people turned to credit cards and borrowing on their homes just to get by. Evenually the economy collapsed.

The Romneys and Wall Street 1%er types did very well from this destruction of our economy and our capacity to earn a living, as they have been doing since the collapse. China has also done very well by this. And they are all trying to keep things that way.

Connecting Dots

Dot: Under Bush we lost 50,000+ factories and 1/3 of our manufacturing jobs. Non-manufacturing was also hit hard with outsourcing of jobs to other countries. Companies then used the threat to move other jobs to force wage and benefit cuts here. “If you don’t agree to this we’ll just move your job, too.”

Dot: Since the “recovery” began the richest 1% received 93% of the economic gains. It’s all going to the top — to the Romneys among us.

Dot: Washington Post: Romney’s Bain Capital invested in companies that moved jobs overseas. Note that Romney’s company “pioneered” the practice. They didn’t just do it, they “pioneered” it,

Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components…

Dot: The Supreme Court’s “Citizens United” decision allows unlimited secret money to influence our elections. Secret, as in we don’t even know what country the money comes from, never mind what companies or billionaires.

Dot: Huge amounts, from the 1%ers, all coordinated: Romney plans posh weekend donor retreat featuring Rove and VP hopefuls,

The presumptive Republican nominee and his senior advisers and aides are hosting two days of policy sessions and campaign strategy discussions at the Deer Valley resort for more than 100 top fundraisers and their spouses. Those who raised more than $100,000 are expected to attend. … Rove’s appearance could raise questions because of laws barring any coordination between super PACs and campaigns. …

Dot: One source (of many) of this flood of money has been disclosed. Casino billionaire Sheldon Adelson, has already given $10 million to Romney’s campaign, promises a “limitless” amount — $100 million or more. (He has $25 billion, largely thanks to China.) There are also allegations of corruption, bribery and violations of US law in the operation of these Chinese-licensed casinos.

Dot: Adelson’s exclusive Chinese-granted casino license is worth billions, and he has used his influence with Republicans in Congress to help China. Adelson influenced Republicans to help China get the Beijing Olympics and then received the license to build casinos in Chinese territory. From the New Yorker, The Brass Ring: A multibillionaire’s relentless quest for global influence,

In July, 2001, Adelson met with a Vice-Premier of China, Qian Qichen … [and] met with the mayor of Beijing, who asked Adelson for help with a matter pending in the U.S. House of Representatives, which he believed was threatening China’s chance to host the Olympics.

Adelson … immediately made calls on his cell phone to Republican friends in Congress—including Tom DeLay, then the majority whip—who had received generous support from Adelson. DeLay told him that there was indeed a resolution pending …opposing China’s Olympic bid, saying, “China’s abominable human rights record violates the spirit of the games and should disqualify Beijing from consideration.” … Three days later, the International Olympics Committee voted in China’s favor. [Adelson received the casino license soon after, in early 2002 - dj]

[…] In May, 2004, the first gamblers entered the Sands Macao. Its construction costs were two hundred and sixty-five million dollars, and Adelson made back his initial investment in a year. In December, 2004, Adelson took Las Vegas Sands public (according to Forbes, he owns sixty-nine per cent of the stock) and became a multibillionaire, overnight.

Adelson used his influence with the Republicans in Congress to help China get the Olympics, and then got a casino license worth billions to him. What else has he helped or will he help China get?

Dot: McCain: Adelson funding Romney Super PAC with ‘foreign money’.

Senator and Romney presidential campaign surrogate John McCain (R-AZ) said Thursday that casino magnate Sheldon Adelson is indirectly injecting millions of dollars in Chinese “foreign money” into Mitt Romney’s presidential election effort.

Owing China

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” – Upton Sinclair.

When China offers you a path to make a huge fortune, you start to have a hard time understanding how this can hurt your own country. As I said last week in Why Can’t Apple Make Your IPhone In America?,

China offers our business leaders an amazing deal – a deal that they can’t refuse. The owners and managers of our companies get really, really rich if they play along with China. Nerver mind if the companies go away later, they’re rich.

… In fact, China has essentially recruited our own business leaders to fight against our own government.

Romney’s Bain Capital, and so many others, have made fortunes from offshoring our jobs, factories, industries, technologies and our economy. Fortunes. And now they are applying those China-made fortunes to our election process.

How Much Of Romney’s Campaign Money Comes From Or Depends On China?

So we know about one source of secret money funding Romney’s campaign, and this source is directly obliged to China for much of his multi-billion fortune, and has influenced our government on China’s behalf in the past. But we don’t know anything about much of the rest of the money that is being spent on the flood of negative ads and other persuasion and election efforts.

How many of Romney’s other funding sources are dependent on China for their fortunes, directly or indirectly? And how much will this lead them to have trouble understanding how shipping jobs and factories and industries to China hurts our country?

The question is out there, and really should be answered before the election. How much of Romney’s huge, secret, campaign war chest comes directly or indirectly from China? And beyond China, where else is Romney’s campaign money coming from?