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| Bush should be impeached for the war in Iraq. Read how he got us into it |
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| What you need to know about Social Security |
links to read a rough draft of "The New Deal"
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Minnesota who was assasinated before the
2002 election by the conservative white trash
that rules this country so they could take
control of the senate and ram their agenda
down the throats of the american people
Missouri who was assasinated right
before the 2000 election on behalf of
criminal conservatives who have taken
over our government in order to pass
legislation on behalf of criminals in the
energy, healthcare and Tobacco
industries and force their ideology on the
world. Their agenda is to have an
income distribution like Latin America.
Watch the movie Seven Days in May.
(who will transfer it back to him after he leaves
office) defrauded the government billions of
dollars via Tenet Healthcare. I meant to say HCA
Healthcare. See article below. After pulling off
such a successful scam the senate criminals
decided he was worthy to be their fearless leader.
I
It’s obvious that the profiteers in the energy industry will have to be exterminated along side those in the healthcare industry
BP update raises hopes for bumper year
Financial Times July 6
by Thomas Catan In London
BP,the worlds second largest oil company yesterday estimated its second
quarter production rose 3.5_per cent over the previous year, raising expectations of
bumper earnings report and sending its share price higher. The company said it was
on track to meet its average production this year of 4.1m to 4.2m barrels of oil equivalent a day and indicated that oil prices
had soared 46 per cent during the past 12
months. BP told analysts, that, for every $1 increase in the price of oil, the company stood to make another $500m in
annual profit. However, the company warned it would take an unspecified charge for a blast this year at a refinery in Texas
in the US.
"The upstream performance was good," said Bruce Evers, an analyst at Investec
Securities, adding that he was not surprised that higher oil prices had adversely affected some downstream parts of its
business. "All in all, the company is generating phenomenal_amounts of cash, which go back to [the] share-holder," he
said. _BP said its production of oil and gas would be broadly in line with the level it achieved in the first quarter - just
over 4.1m barrels of oil equivalent a day. That compares with 3.97m barrels day in the second quarter of 2004. BP's
production growth is heavily dependent on TNK-BP, its Russian joint venture. Its production in other parts of the world has
declined almost 2 per cent per quarter, according to
investment bank Goldman Sachs. BP's heavy reliance on Russia worried some observers in the wake of the government's
break-up and facto nationalisation of Yukos. However, some analysts said they were cheered tht BP's Russian production
was living up to its potential.
BP’s trading statement came after upbeat guidance last week from Conoco Phillips and 'Unocal, raising expectations of
another round of huge earnings announcements from oil majors this year.
Almost all international oil companies have been buoyed by rising energy prices but BP is seen as particularly sensitive to
changes in the headline figure. Goldman Sachs said last month that BP's 'production growth had been largely priced into
the stock, However, it noted that the company's valuation "would benefit disproportionately. From an increase to long term
oil prices”
Lord, Browne, BP 'chief executive, said last month that he expected the oil price to remain above $40 a barrel for ,three or
four years.
The Economy Is a Values Issue
by EPI President Lawrence Mishel
The discussion of the 2004 presidential election is just the most recent reminder of a curiosity in American politics: "values"
issues are always social issues but never economic ones. Yet how the disadvantaged among us are treated is clearly a
reflection of who we are as a people. How workers are treated on the job—their safety, their working conditions, their
remuneration—also speaks volumes about our values as a nation. How we care for the elderly and the disabled, our
response to child poverty, and our compassion for the less fortunate are measures of our society's values, and they are
social problems that can be addressed by economic policy.
Of course, economists contend that economics is a science. "Tell me what you want to do and I will tell you the best way to
do it" is the economist's usual stance. (Or, as one economist remarked, his role is to say, "Tell me what you want and I'll tell
you why you can't have it.") Clearly, this framework leaves no room for values. The underlying assumption is that unfettered
markets, free and unrestricted by government or private institutions such as unions, produce the best outcomes, except in
a few very specific situations: externalities (such as pollution imposed on society but not reflected in producers' costs),
monopolies, and other "market failure" cases from Econ 101.Some economists, such as Martin Feldstein (leader of the
premier economic research organization, the National Bureau of Economic Research) have contended that inequality is not
a proper concern for economists, who should be focused only on determining how to maximize the output of goods and
services.
It is important to examine whether unfettered markets are the appropriate means of organizing our economy, both in terms
of the values we seek to see reflected in our society and for achieving our economic goals. One's view of the proper role of
individuals, institutions, and government in the economy is determined, in large part, by one's assessment of the merits of
unfettered markets. The U.S. economic policy debate is in fact dominated by the assumption that unfettered markets work
best, a view that's applied to our domestic economy and to that of other countries through international financial institutions
that the United States controls.
Yet there is plenty of room for applying values to the economy: an economy can be structured in many different ways and
still achieve the same amount of efficiency, i.e., produce the same outputs with the same inputs. This was the conclusion of
a book that Rebecca Blank edited for the National Bureau of Economic Research (NBER) a decade ago. Major European
countries, for example, have a set of policies that are far different from ours: a strong social insurance system, government
provision of health care, higher taxes, and far less inequality. Yet these countries have seen faster productivity growth—the
gain in economic efficiency—than the United States for most of the last four decades. At first, this trend was mainly a
process of "catching up" to the United States, the technological leader. However, many of these countries have now
surpassed the United States in productivity.
It seems impolite in America to mention this, but we live in a class society. There are various groups differentiated by their
income and power, and the positions of these groups are strongly maintained over time. It's not that there isn't any upward
and downward mobility; it's just that there's not enough of it to make having a favorable, or unfavorable, class position
seem like a temporary arrangement.
There has been a dramatic upward shift in income over the last few decades, coupled with a growing gap between those at
the very top and those at the bottom of the income scale. In fact, inequality has grown far more in the United States over
the last three decades than at any time in the last century, and far more than in any other advanced country.
Using some data from NBER researchers Thomas Pikkety and Emanuel Saez, it is possible to illustrate how large both the
income redistribution and the scale of inequality in America have become:
The top 1% of families earned 9.3% of all income in 1980. By 2000, this income share had increased to 19.6%.
Correspondingly, the income share of the bottom 90% declined from 66% to 53.9%. There were small gains (1.9
percentage points) in the income shares of the remaining group, the 90th to 99th percentiles.
From 1980 to 2000, the incomes of the upper 1% increased 179%, while those of the bottom 90% increased by only 8%.
In 1970, the ratio of top executive earnings to that of the average worker was 38.6 to 1. This ratio increased to 101.1 by
1980, to 222 by 1990, and to 1,046 in 1999.
Because of this inequality, low-income families in the United States are not better off than low-income families in some
countries that have lower incomes than in the United States. And even though we think of ourselves as a mobile society
compared with Europe, recent research indicates that the United States has less class mobility than previously believed,
and less than in European countries. It is also the case that class mobility has not increased over the last few decades.
Even if income were distributed according to merit or to the value of one's skills, we would still need to care for society's
most disadvantaged and guarantee them a decent standard of living. Moreover, children do not start off with the same
amount of resources—monetary assets, or family "social capital"—and a child's economic outcome depends at least as
much on background as on effort or character.
The social class you belong to really matters—it determines your health, how long you live, where you live, your exposure
to crime, your success in school, and the likely success of your children. A task force of the American Political Science
Association has recently concluded that inequality in income and resources translates into inequalities in participation and
effectiveness in our democracy.
This inequality and how it is addressed in the United States is a clear example of the intersection of economics and values
issues. Economic policy is just as much of a "values issue" as any of those that are more frequently discussed. Moreover,
the teachings of the various faiths have much to say on economic matters. I daresay that there's no reason to believe that
"free markets" provide us with the type of society our faiths guide us to have in terms of the lives of the poor, the treatment
of workers, and the solidarity of our communities.
This essay appeared in different form as "Dismal Scientists" in The American Prospect Online, May 27, 2004. The article
draws on Is the Market Moral? by Rebecca Blank and William McGurn, published by the Brookings Institution and the Pew
Forum on Religion and Public Life.
LAWRENCE SUMMERS MEMORIAL AWARD
The March/April Lawrence Summers Memorial Award* goes to SeaCode company, which plans on locating a cruise ship in
international waters, just off of the California coast, and out of reach of U.S. labor, employment and immigration law, to
house a software development company.
The idea is that the company will be able to deliver project pricing “comparable to a distant-shore firm,” but from closer
geographic proximity to U.S. clients. The company also plans to have programmers form around-the-clock development
teams.
SeaCode’s founders say their primary motivation is to get around immigration restrictions on using foreign programmers in
the United States. The founders promise the workers will be treated well, and able to use the cruise ship’s amenities in off
hours. By contrast, information technology columnist John Dvorak has disparaged the idea as an “Indian slave ship.”
Source: Linda Briggs, “Outsourcing off Los Angeles?”
ADTmag.com, April 18, 2005.
Wall Street Ascendant
by Doug Henwood
This magazine was born during the early battles of the Shareholder Revolution, which would transform the financial markets
from being the playground of professionals and a handful of amateurs into the center of modern economic life. Now it all
seems so normal that it’s easy to forget that the Wall Street ascendancy has a history.
In the United States, the modern large corporation emerged as the nineteenth century was turning into the twentieth. The
scale of production had greatly outstripped an ownership structure dominated by individual owners and small partnerships;
they couldn’t survive the intense competition of a developing national market. Sharp operators on Wall Street took
advantage of the situation, assembling the small, failing firms into large corporations, making themselves very rich in the
process. Shares in the new combinations were sold to public investors, giving birth to the modern stock market.
It is important to note that the modern corporation and the stock market grew up beside each other; they’d be companions
from then on, though closer at some times than others. And, at the same time, the running of those corporations was
turned over to a new class of professional managers, who were essentially the shareholders’ hired hands.
Unlike line workers, those hired hands have often proved very difficult to supervise. Legally speaking, the shareholders own
corporations, and are entitled to the profits remaining after firms pay their business expenses, taxes and interest. But that
leaves managers with a great deal of wiggle room: they can always shirk and swindle, and shareholders are often in a weak
position from which to scrutinize them. In the jargon of financial economics, shareholders are the principals and managers,
their agents. In good times, the principals and agents can get along well; in bad times, there’s rich potential for conflict.
What the Shareholder Revolution wrought was greater discipline over corporate executives by shareholders. But it is a
strange discipline, one that actually rewards CEOs and the managerial class — so long as they are sufficiently ruthless in
dealing with workers and externalizing costs on to society.
Shareholder lament
Let’s step back and review the history of elite thinking about how corporations should be governed. An important milestone
in that evolution was the 1932 publication of Adolph Berle and Gardiner Means’s classic book, The Modern Corporation
and Private Property. Berle and Means described a world in which shareholders had been fleeced by managers — an
understandable position, after all the scandals of the 1920s (which were remarkably like the scandals of the 1990s). But
shareholders were largely powerless to respond — there were too many of them, spread too far and wide, to rein in the
managers. The principals were principals in name only; the agents really had the upper hand.
Berle and Means listed several avenues of managerial abuse of the tragically disenfranchised owners: “out of professional
pride,” managers could “maintain labor standards above those required by competitive conditions,” or “improve quality
above the point” that is likely to be maximally profitable to shareholders. This held the potential for “a new form of
absolutism, relegating ‘owners’ to the position of those who supply the means whereby the new princes may exercise their
power.
In his preface to the 1967 reissue of the book, Berle described the new system as one of “collective capitalism,” an affair
that yokes together thousands of corporations, and millions of employees, owners and customers — too many people to be
considered private enterprise in the classic sense. And since the state was now so deeply involved, no redefinition of
“private” could ever be broad enough to apply. Research was no longer carried out by lone inventors, but in teams, and no
longer within a single enterprise, but in cooperation with university and government researchers — and subsidies as well.
To the 1967 Berle, these changes had moved us “toward a new phase fundamentally more alien to the tradition of profit
even than that forecast” in the first edition of their book.
The same year that Berle updated his classic, John Kenneth Galbraith published another, The New Industrial State.
Galbraith’s stockholders were almost vestigial, a “purely pecuniary association” divorced from management, too numerous
and dispersed to have any influence. When displeased with “their” corporation, they would sell the stock rather than pick a
fight with management. Stockholder rebellion among large corporations was “so rare that it can be ignored.” Galbraith’s
corporation was run by a “technostructure” of suits and geeks largely insulated from financial pressures.
Profit maximization had been rendered obsolete. To Galbraith, higher profits could only come with an unwelcome increase
in risk, and would have to be passed along to shareholders anyway. Executive pay was relatively modest and unconnected
to the stock price. Secure mediocrity was the goal. Galbraith’s corporation had become subservient to the larger society
and the state, with the state providing economic stabilization and an educated workforce.
That all seems pretty quaint now, but it was 1960s orthodoxy. This nice world came apart in the 1970s. Stocks had their
worst decade since the 1930s. To the ruling classes, things were wildly out of whack, with U.S. workers acting insolent and
the Third World in rebellion. Subduing the Third World was left to Reagan and the contras, but Wall Street declared war on
the workers’ insolence — and in this case, corporate managers were a special kind of worker that also needed to be
subdued.
“Subduing” the executives
To accomplish that subduing, Wall Street has deployed several strategies over the last two decades. First was the wave of
hostile takeovers and leveraged buyouts that dominated the financial landscape of the 1980s. Underperforming companies
— those generating profits insufficient to satisfy shareholders — were taken over, either by allegedly more competent rivals
or by corporate raiders, or they were taken private by a management team in partnership with outside investors using lots
of borrowed money. Regardless of the financial maneuver, the operational strategy was similar: shut or sell weak divisions,
lay off workers, cut wages, break unions (where they existed), speed up the line, get profits up. The moral philosophy of
this period was nicely summed up by Oliver Stone’s Gordon Gekko in the movie Wall Street: “Greed is good.”
Unfortunately, these maneuvers usually involved lots of debt, and the debt load proved crippling by decade’s end. So there
was a shift of strategy toward shareholder activism. Led by large pension funds, particularly the California Public
Employees Retirement System (Calpers), institutional investors drew up hit lists of saggy companies, and pressed their
managers to shape up or ship out.
At the same time, executives’ pay was shifted from straight salaries towards stock options. The idea was to make managers
think not like pampered employees, but like stockholders, whose income was directly tied to the stock price. The
operational strategy was similar to that of the 1980s, however — downsizing, outsourcing and speedup — whatever was
necessary to get profits up, and with them, stock prices.
Actually, it’s surprisingly hard to prove that corporations that go through “restructuring” actually improve their profit
performance. (But it’s hell on the workers being restructured; a Finnish study shows that employees who survive a typical
restructuring enjoy a doubling of the risk of death from cardiovascular disease.) At the macro level, however, it’s a different
story. Two decades of ceaseless mass layoff announcements have induced a climate of fear and deference, the inclination
to do whatever the boss asks. In congressional testimony, Federal Reserve chair Alan Greenspan cited survey evidence
showing workers feeling far more anxious than the actual unemployment rate would suggest.
Tying managerial pay to stock performance hasn’t turned out quite as planned. The strategy was supposed to solve at
least two problems. Aligning managers’ incentives with those of shareholders was supposed to end the owner-manager
conflict that Berle and Means and others whined about. And since financial theory assured that the stock market’s
judgments of corporate performance were as good as you could get, managers were thereby held to an objective and
pitiless discipline. If the stock was up, the CEO must be doing something right; if it’s down, something’s wrong.
Reality has disappointed these schemes. Managers good and bad profited from the bull market of the 1990s, which drove
most share prices relentlessly higher with little distinction. Business Week’s annual surveys of executive pay prove year
after year that there’s no relation at all between compensation and corporate performance. And in seriously troubled
companies, like Enron, where profits were invented by the accountants, there was no incentive to blow the whistle. Instead,
the incentive was the opposite, to experiment more aggressively with creative accounting and keep quiet.
Executives have thrived under the new order. Unlike Galbraith’s day, CEOs are now paid like moguls, not high-end
functionaries. When Business Week started doing its annual compensation survey in 1950, the highest-paid CEO was GM’s
Charles Wilson, who took home 229 times as much as the average worker. In 2001, the peak of the boom, the pay champ
was Oracle’s Larry Ellison, who exercised some long-held options and pulled in 28,193 times as much as the average
worker. Those are extreme cases compared over the very long term, but even nonextreme comparisons are stunning: the
average CEO pulled down more than 400 times as much as the average hourly worker in 2001, up from a mere 42 times in
1980. With the post-bubble “moderation” in executive pay, that ratio fell back a bit, to 300 times as much as the average
worker in 2003.
Many of the unpleasant features of modern U.S. economic life — polarization between rich and poor, a poverty rate higher
than 1973’s record low even though real GDP has more than doubled, rising insecurity and stress, stagnant wages and
shrinking benefits — are blamed on abstract forces like technology and globalization. Both words describe what
corporations have been doing — automating, surveilling, outsourcing — in response to Wall Street pressures to goose up
profitability. It’s worked pretty well for them.
Doug Henwood is editor of Left Business Observer, host of a weekly show on WBAI (New York), and is the author most
recently of After the New Economy (coming this spring in paper from the New Press.
Slow Motion Coup d'Etat
Global Trade Agreements
and the Displacement of Democracy
by Lori Wallach
In the 1980s, the same ideological and business interests behind the Thatcher and Reagan “revolutions” opened a second
front in their campaign to create a world in which the role of government would be shrunk and the fulfillment of basic human
rights and needs would be left to the mercies of markets and corporations.
Their strategy was to transform the 1947 General Agreement on Tariffs and Trade (GATT) into a powerful new system of
global governance that would fence in the permissible scope of accountable democratic governance. This new system of
global governance was envisioned to be an instrument to implement one-size-fits-all, within scores of countries, the policies
that would enable corporate rule to thrive.
The GATT was a narrowly-cast 20-page trade pact created after World War II to set tariff rates and quota levels for trade in
goods between countries. Countries met several times a decade for a “round” of GATT negotiations during which they
agreed to cut tariffs or quotas further. In the United States and some other nations, these new tariff and quota terms would
then be brought to legislative bodies for approval. However, because the narrowly construed GATT and the notion of free
trade generally enjoyed broad support, these votes in the U.S. Congress were not controversial.
Press and parliamentarians assumed it was business as usual when GATT signatories met in Uruguay in the mid-1980s to
launch a periodic round of GATT talks. This lack of scrutiny made these obscure “Uruguay Round” GATT negotiations an
ideal Trojan horse within which an expansive non-trade policy agenda could be developed and signed, and that could then
be rolled in disguise through legislatures.
The Uruguay Round eventually resulted in the creation of the World Trade Organization (WTO) in 1995. The WTO totally
transformed the nature and scope of “trade” agreements — replacing a relatively brief list of objective norms (domestic and
foreign goods must be treated the same, for example) that only applied to trade in goods between nations. The WTO in
contrast sets subjective policy — establishing, for example, how safe a country may choose to make its food supply through
regulation — and imposed policies on a range of issues reaching far beyond trade, including patents, investment rules and
matters related to the service sector. Contained within the legislation implementing the WTO and in the pact’s 900 pages
were many Reagan Administration proposals that already had been specifically rejected by the then-Democratic Party-
controlled U.S. Congress.
During the same period as the GATT Uruguay Round negotiations, the Reagan administration also proposed negotiating
new regional “free trade agreements.” A U.S.-Canada Free Trade Agreement was launched in 1988 and was replaced by
the North American Free Trade Agreement (NAFTA) in 1994. Like the WTO, NAFTA exploded the boundaries of what was
included in so-called trade agreements. The deals are more accurately dubbed corporate globalization agreements.
Regulating gov’t, deregulating business
International commercial agreements, like WTO and NAFTA, include a broad deregulatory agenda, slashing food safety,
environmental and other public interest protections by labeling them “illegal trade barriers” that must be eliminated.
These pacts also promote commodification of common resources by, for instance, requiring signatory countries to issue
patents on plant varieties or traditional medicinal plant uses so that the planet’s natural biodiversity and the common
heritage of the planet’s people can be transformed into tradable units of property for profit.
The WTO and NAFTA rules covering the service sector operate to transform services like healthcare, education, electricity
and other basic utility essentials into commodities by encouraging broad privatization and deregulation. The WTO and
NAFTA establish a right for foreign corporations to own, operate or establish an unlimited array of providers of such critical
services, which now are often either provided by governments or via highly regulated monopolies.
The agreements also create new protections for corporations, for instance by requiring all signatory nations to establish
new monopoly-style intellectual property rights (patents, copyrights) for a vast array of knowledge and items — from seeds
and plant varieties to medicines — many of which are otherwise available for unrestricted use. In exporting the U.S.
monopoly patenting system which has contributed to high drug prices, the WTO and NAFTA’s intellectual property rules
undercut poor countries’ capacity to make essential medicines available to their populations.
These trade agreements established new rights for foreign investors to operate, while limiting governments’ authority to set
the terms of such foreign investment to ensure that it benefits residents of the host country — not just the foreign investor.
For instance, the special privileges granted foreign investors under NAFTA forbid countries from using capital controls to
avoid currency crashes during economic crises, even though such policy instruments have proven time and again to be
vital for avoiding economic meltdowns. Both NAFTA and the WTO contain foreign investment protections that forbid
governments from using the policies — such as requiring that manufactured goods include a percentage of domestic
content, or that a percentage of products be exported — that were essential components of the industrial policies employed
by the fast-growing Asian economies. Indeed, no country has moved from poverty except by employing the very policies
forbidden by WTO and NAFTA. Thus it is not surprising, if horrifying, that grinding poverty has worsened in many
developing countries that followed the WTO/International Monetary Fund model most faithfully, while countries like China,
Vietnam and Malaysia that have either remained outside the WTO or selectively implemented its terms, have grown
dramatically, bringing many to a better standard of living.
In yet another torturous twist, NAFTA and the WTO protect subsidies given to agribusiness for exporting commodities, while
certain domestic subsidies to support small farms or ensure food sovereignty are characterized as “illegal trade distortions.”
All of these new corporate rights are enforced by a new, powerful and binding dispute resolution system unlike anything
from any past trade agreement or included in environmental, human rights or other treaties. A key WTO provision requires
nations to “ensure conformity of their laws, regulations and administrative procedures” to the WTO’s terms.
Any national or local policy of a WTO or NAFTA signatory nation that falls outside WTO or NAFTA’s terms — even if it has
nothing to do with trade per se — is challengeable as an “illegal trade barrier” before a WTO or NAFTA tribunal. These
panels are comprised of three trade officials meeting behind closed doors. Nations whose policies are judged not to
conform to WTO or NAFTA rules are ordered to eliminate them or face permanent trade sanctions.
A corporate bill of rights
While both WTO and NAFTA represent an audacious power grab, many of the rules of NAFTA are considerably more
extreme than the rules of the WTO.
Because WTO negotiations included scores of countries — including some progressive European nations and many large
developing countries such as India and Brazil — it was possible to generate a critical mass of push-back against some of
the most extreme proposals emanating from the Reagan administration.
In contrast, the power imbalance inherent in the U.S. relationship with Mexico and Canada meant that NAFTA was more of a
dictation than a negotiation, and the first Bush Administration was able to insert into NAFTA the most complete and extreme
version of the corporate-friendly agenda it favored. NAFTA is considered the gold standard for mechanisms furthering
corporate globalization because it includes service sector privatization and deregulation, government procurement
deregulation and foreign investor protections that go well beyond the WTO’s rules on these issues.
For instance, NAFTA requires signatory countries to provide foreign investors a much more expansive list of new privileges
than is required under WTO rules, including privileges that extend beyond the property rights guaranteed by the U.S.
Constitution. NAFTA gives foreign investors the right to be compensated for the costs domestic environmental or health
regulations applicable to all businesses might pose to their expected future profits, for example.
Under NAFTA, foreign corporations and investors are empowered to privately enforce these new privileges and rights —
where the WTO renders all disputes between governments. NAFTA contains a mechanism allowing foreign investors to sue
signatory governments in private NAFTA tribunals demanding cash compensation for government policies that do not
satisfy the NAFTA-guaranteed minimum standard of treatment for foreign companies.
Neither Congress nor the public must be given notice of these NAFTA investor cases, so it is unclear how many have been
filed. However, more than 40 cases are known to date and several have been decided.
In one case, the government of Mexico paid Metalclad, a U.S. toxic waste company, $16 million in damages after a NAFTA
tribunal ruled that a Mexican municipality’s refusal to grant a construction permit for a toxic waste treatment facility in an
environmentally sensitive area violated Metalclad’s NAFTA investor rights.
In another case, Canada paid the U.S. corporation Ethyl $12 million in compensation and reversed a ban on a toxic
gasoline additive called MMT after Ethyl filed a NAFTA challenge.
Not even international environmental and human rights treaties are free from these attacks: in another case, a U.S.
corporation called S.D. Meyers received millions in compensation after a NAFTA tribunal ruled that Canada’s
implementation of the Basel Convention, an international treaty on the handling of toxic waste, had limited S.D. Meyer’s
business opportunities in PCB toxic waste disposal trade.
In pending actions, a Canadian tobacco company has challenged the tobacco settlements made by assorted U.S. states as
a disadvantage to their expected market share in the United States. And a Canadian mining company has just filed a claim
for $300 million against the U.S. government because California denied it a permit to dig an open-pit mine on land deemed
sacred by a California Indian tribe.
Meanwhile, an array of U.S. health and environmental policies have been weakened to meet WTO or NAFTA rules:
imported meat is now permitted even if the foreign plants in which it is processed do not meet U.S. safety standards; U.S.
Clean Air Act regulations, dolphin-safe tuna labeling and Endangered Species Act have all been successfully attacked in
trade tribunals — meaning dirtier gasoline was allowed for sale in the most polluted cities and that dolphin-safe labels on
tuna cans no longer means no dolphins were killed in the tuna harvest.
The power of obfuscation
How could such a far-reaching rewrite of domestic policy have been sneaked past the public, press and Congress? The
WTO and NAFTA were designed by corporate lobbyists purposely to be inaccessible. The agreements were negotiated in
closed sessions where corporate leaders act as official advisors to governments. For instance, when the WTO and NAFTA
were negotiated, over 500 corporate representatives were operating as official U.S. trade advisors. These presidential
appointees have security clearance and are allowed to attend negotiations and have access to the confidential negotiating
texts. The agreements are written in “GATTese,” a language understood only by trade lawyers. In the early 1990s, when
the WTO and NAFTA votes occurred, attempts by groups such as Public Citizen to warn about these pacts’ true
implications were dismissed as simply unbelievable.
If such an autocratic, anti-democratic governance system had been imposed over elected governments around the world
by force, human rights monitors and UN inspectors would have been dispatched.
Instead, the NAFTA and WTO’s silent slow motion coup d’etat against democratic governance everywhere will be reversed
only by citizen activism and campaigning.
There is resistance to expanding the WTO/NAFTA model — abroad and in the United States, only the most visible
manifestation of which were the protests in Seattle at the 1999 WTO Ministerial Meeting. The reasons for resistance are
clear: In 2005, 10 years since the WTO and NAFTA, U.S. wages have remained flat. A $600 billion trade deficit puts the
United States in a precarious position of depending on foreign investment to keep the already-falling dollar from crashing.
Meanwhile, the export of high-paying jobs with health and benefits in fields such as tax preparation, medicine and law is on
the rise, with even conservative estimates indicating a loss of at least another three million jobs over the next decade.
It would be one thing if the decline in the U.S. standard of living contributed to improving the conditions for the majority of
the world’s population living in poor countries. However, the WTO/NAFTA model is a lose-lose with wealth extracted by
supercorporations from both rich and poor countries’ workers, farmers and small businesses.
If progressive forces are able to defeat a proposed deal to expand NAFTA to Central America — the Central American Free
Trade Agreement (CAFTA), signed in May 2004 but not approved by Congress because of a dearth of support — the era
of “trade agreements” being hijacked to impose a retrograde corporate agenda worldwide may be over.
Of the Bush administration’s second-term priorities, CAFTA remains one that does not enjoy even widespread support
among Republicans. Its rejection could spell the end of the even more astounding proposal to expand NAFTA to 31 nations
in a Free Trade Area of the Americas. There is momentum to restrain corporate rule, yet only the energy and will of
engaged citizens at home and abroad can make 2005 the year the turnaround begins.
--------------------------------------------------------------------------------
Lori Wallach is Director of Public Citizen's Global Trade Watch and co-author with Patrick Woodall of Whose Trade
Organization? A Comprehensive Guide to the WTO.
Profits of War
The Fruits of the Permanent
Military-Industrial Complex
by William Hartung
U.S. weapons contractors have had their ups and downs over the past 25 years, but they have done far better than they
should have. They have cashed in by pursuing a few simple strategies: 1) exaggerating the threats faced by the United
States; 2) marketing their weapons systems as the answer to national security problems, regardless of their actual
relevance to the needs of the moment; and 3) exploiting well-cultivated relationships with Pentagon officials, members of
Congress, White House decision makers and opinion shapers in the media and think tanks.
The Reagan revolution
In the mid-1970s, the industry and its allies in the Pentagon, on Capitol Hill, and in organizations like the right-wing
Committee on the Present Danger (CPD), were looking for ways to reverse the decline in military spending in the wake of
the Vietnam War.
The 1976 election of Jimmy Carter, who campaigned on a platform of promoting human rights and curbing the arms trade,
got the industry’s back up, prompting the creation of a specific industry lobbying group, the American League for Exports
and Security Assistance (ALESA). ALESA was explicitly designed to thwart Carter’s efforts on this front.
The overthrow of the Shah of Iran by internal opponents in late 1978 coupled with the Soviet invasion of Afghanistan in
1979 gave political ammunition to hardliners within the Carter administration, moving it to the right as it called for the
development of a Rapid Deployment Force capable of intervening militarily in the Persian Gulf on short notice.
Simultaneously, the CPD was winning a propaganda war that claimed that the CIA had badly underestimated Soviet military
strength.
The arms industry was the direct beneficiary of these developments, as it backed the CPD’s preferred candidate, Ronald
Reagan, in his 1980 bid to oust Carter from the White House.
The industry as a whole cashed in, as Reagan pursued the largest peacetime military buildup in U.S. history, while specific
companies got special favors. Rockwell International was able to restore funding for the B-1 bomber, combining White
House support with a pork barrel campaign that placed subcontracts for work on the plane in nearly every Congressional
district. Boeing benefited from the administration’s all-out support for a multi-billion sale of AWACS radar planes to Saudi
Arabia, while General Dynamics reaped the rewards from a relaxation of the Carter administration’s limits on sales of
combat aircraft to Latin America to squeeze in a sale of F-16 fighters to Venezuela.
The weapons manufacturers ultimately over-reached during the Reagan years, leading to several high-profile scandals.
These included the so-called “spare parts” scandal that revealed charges of $600 for toilet seats and $3,000 for coffee
pots, which were in fact just the symbols of an entire procurement system run amok.
There was also Operation Ill Wind, a massive bid-rigging scheme in which former Pentagon officials conspired with their
colleagues inside the building to steer contracts and subcontracts to favored companies while skimming off illegal fees for
themselves. Major firms implicated in Ill Wind included Boeing, Hughes, General Dynamics and General Electric. Meanwhile,
Lockheed was caught rigging a major test for Reagan’s beloved Star Wars program.
And, in the most dangerous scandal of all, a National Security Council staffer named Oliver North was caught running an
illegal gun-running operation out of the basement of the Executive Office Building, using a network of front companies and
unsavory characters to override the will of Congress and subvert the Constitution while arming the government of Iran and
the anti-government contra “rebels” in Nicaragua.
Even during the industry-friendly Reagan era, the military-industrial complex was far from all-powerful. A grassroots anti-
nuclear movement campaign transformed Reagan from the president who joked that “the bombing will start in five minutes”
to the first president to agree to deep cuts in the U.S. nuclear arsenal. Reagan’s pet project, the Star Wars missile defense
system, was unceremoniously thrown onto the back burner in the face of a highly effective public campaign waged by
technical experts from groups like the Union of Concerned Scientists that indicated that the system would be both
destabilizing and unworkable. The Ill Wind scandal led to reforms in weapons procurement processes, while the exposure of
the Iran/Contra scandal at least briefly curbed the Executive Branch’s appetite for covert foreign adventures.
The threat of peace
The greatest threat to the revenues of the arms industry came with the end of the Cold War and the collapse of the Soviet
empire.
General Colin Powell, who served as chair of the Joint Chiefs of Staff in the administrations of George Bush the elder and
Bill Clinton, was perhaps a bit too forthcoming when he noted that the U.S. was “running out of enemies.”
The Pentagon and the Joint Chiefs eventually settled on a strategy of selling the need for a capability to wage two “major
regional conflicts” against “rogue states” like Iraq or North Korea simultaneously, and promptly overstated the strength of
these new priority adversaries. This strategy helped limit cuts in military spending to levels far less than would have
otherwise obtained, stabilizing at Cold War levels despite the lack of a superpower adversary.
In parallel with the Pentagon’s efforts at creating new threats, the arms industry was doing its part to keep spending as high
as possible, in part by funding right-wing think tanks like Frank Gaffney’s Center for Security Policy, a full-time media
megaphone for reviving Star Wars and restoring Reagan-era military budgets.
Individual companies also engaged in efforts to re-position existing programs for the new era. For example, Lockheed
produced a brochure for its F-22 fighter plane, which had originally been designed to do battle with a next-generation
Soviet combat aircraft that no longer existed, arguing that its new rationale was to fight the “blue-gray threat.” By this, the
company meant the growing proliferation of advanced U.S. or European-origin fighter planes and anti-aircraft systems sold
to countries that were currently either neutral towards the United States or active U.S. allies. The argument went that if any
of these nations turned against the United States, the country needed to have better fighter planes than they had. And
since the United States had already sold them its best aircraft, it followed that it was imperative to build the next generation
fighter jet, the F-22. In short, as the cartoon character Pogo used to say, “we have met the enemy, and it is us!”
The arms lobby also sought to bolster its profitability in the immediate post-Cold War years by boosting foreign sales, such
as the $6 billion sale of 150 F-16s to Taiwan and the $9 billion sale of 72 McDonnell Douglas F-15s to Saudi Arabia that
were brokered during the stretch run of the 1992 presidential election. George H.W. Bush appeared to announce the F-16
deal at the General Dynamics plant in Fort Worth, Texas in front of a crowd of cheering workers with signs that said “Thank
you President Bush for saving our jobs.” He held a similar rally in St. Louis, Missouri at the F-15 factory. The F-15 sale was
helped along by a heavy industry lobbying campaign that included distribution of a video entitled “F-15s for Saudi Arabia —
Made in America” which made it look like the entire industrial Midwest would go down the tubes if the deal wasn’t allowed to
go through.
Other major industry victories during the Clinton years included a revival of spending and serious testing of the missile
defense program, which grew to be a $5 billion per year enterprise with the support of members such as Representative
Curt Weldon, R-Pennsylvania, a member of the advisory board of the Center for Security Policy with a Boeing plant in his
district. The progress of “Star Wars II” was helped along by the findings of the Rumsfeld Commission, another classic
exercise in threat exaggeration headed up by former Ford (and future George W. Bush) Secretary of Defense Donald
Rumsfeld.
Perhaps the industry’s slickest move of all was the “payoffs for layoffs” plan, in which then-Martin Marietta chief Norman
Augustine persuaded Pentagon officials William Perry and John Deutsch to get the government to pick up part of the tab
for arms industry mergers. The idea was for taxpayers to pay to promote consolidation in the industry, in the wake of post-
Cold War reductions in military spending. This approach helped spur mergers of Lockheed and Martin Marietta, Northrop
and Grumman, Boeing and McDonnell Douglas, and numerous other combinations large and small. Eyebrows were raised
by the fact that both Perry and Deutsch had worked as paid consultants for Augustine’s firm before joining the Pentagon.
The Bush II years
Having weathered the post-Cold War period with their profitability intact, the major weapons contractors hit the jackpot with
the presidency of George W. Bush. Well before September 11 cleared the way for major increases in military and homeland
security spending, the industry had already placed its bets on Bush, giving him five times as much in donations in the 2000
presidential race as it gave to his opponent Al Gore. Military spending proper has risen from just over $300 billion per year
when Bush took office to over $439 billion per year in the proposed fiscal year 2006 budget, not to mention the $200 billion
and counting in emergency appropriations approved for the wars in Iraq and Afghanistan. The emphasis on homeland
security has created a whole new pot of money for the companies to pursue, which has more than doubled to over $40
billion per year in the Bush years.
The Big Three contractors — Lockheed Martin, Boeing and Northrop Grumman — combined to split nearly $50 billion in
Pentagon contracts in fiscal year 2004, or nearly one out of every four dollars the Pentagon handed out for everything from
rifles to rockets. By comparison, the top three contractors in the late 1970s accounted for roughly 13 percent of Pentagon
contracts, roughly half the share of the current Big Three.
A new breed of contractors — private military firms like Halliburton, Dyncorp, Blackwater and CACI — has emerged with a
vengeance to supply everything from meals to base and vehicle maintenance, from security services to training in overseas
combat zones. Brookings Institution expert Peter W. Singer notes that reliance on these firms has mushroomed in the last
decade. In the 1990/1991 Iraq war, one in 100 personnel in theater worked for a private firm, while in the current Iraq war
that figure is one in 10.
The Bush buildup has spawned its own scandals, including a corrupt deal to lease Boeing 767s and convert them to aerial
refueling tankers that has so far led to the resignation of the company’s CEO and left another official in jail; a slew of billing
scandals, cost overruns and allegations of fraud by Vice President Cheney’s former firm, Halliburton, in Iraq; and even the
involvement of two private firms, Titan and CACI, in the Abu Ghraib torture scandal in Iraq. These high profile scandals don’
t represent a few bad apples, but a whole barrel that has become rotten from lack of public oversight and accountability.
Nongovernmental organizations in the anti-war and government accountability movements are beginning to work with
members of Congress on everything from tightening the “revolving door” that allows arms industry officials to move
effortlessly between corporate posts and policymaking jobs in government, to the creation of a new Truman-style
commission on war profiteering.
As President Eisenhower noted in his military-industrial-complex speech over four decades ago, only an “alert and
knowledgeable citizenry” can keep the arms lobby under control. We are overdue for a new wave of reform. Our security is
too important to be left to the whims of special interests.
--------------------------------------------------------------------------------
William Hartung is the Director of the Arms Trade Resources Center at the World Policy Institute, at the New School for
Research in New York City.
Monster Banks
The Political and Economic Costs of
Banking and Financial Consolidation
by Jake Lewis
Commercial banks in the United States have been on a wild ride over the last 25 years. They have seen record profits,
vastly expanded powers and a new post-Depression record for bank failures. Today the industry is still in the midst of a
massive concentration of financial resources.
As President Reagan’s first term came to a end in 1984, there were 15,084 commercial banks and thrift institutions in the
50 states. By the end of 2003, the number had dropped to 7,842 — almost a 50 percent reduction. The majority of the
decline from 1984 to 2003 was among banks of $1 billion or less in assets, many them swallowed up in mergers and
acquisitions by the mega institutions.
But the decline was also the result of the massive failures among both banks and thrifts in the mid 1980s and early 1990s.
Between 1984 and 2003, 2,700 banks and thrifts failed. Nearly three-fourths of the failures came in a five-year period,
1987 to 1991.
As a result, the deposit insurance fund for savings and loan institutions collapsed and ultimately required a half trillion
dollars of tax funds to cover the losses and restore deposit insurance. The bank deposit insurance fund itself dipped into
the red in 1991, requiring Congress to vote a $30 billion contingency fund to back up the insurance.
While the number of financial institutions continued to decline in the 1984-2003 period, banking assets were increasing.
During this period, banking industry assets more than doubled — totaling $9.1 trillion at the beginning of 2004. And the
rapidly increasing level of concentration began to show dramatically.
The share of assets in institutions with more than $10 billion rose from 42 percent in 1984 to 73 percent by 2003.
Meanwhile, the share of industry assets in community banks — defined as institutions of less than a billion dollars —
plunged from 28 percent to 14 percent in the same period. The truly small banks with 8 percent of the nation’s assets in
1984 saw their share drop to only 2 percent by 2003.
Measuring concentration by deposits produces equally stark evidence of a banking industry already controlled by a
relatively small handful of dominant players. The top four bank holding companies — Bank of America-Fleet, Citigroup, J. P.
Morgan-Bank One and Wells Fargo — control nearly one fourth of all domestic deposits, and the top 25 banking
institutions have nearly half of all U.S. deposits. In fact, Bank of America, after its merger with Fleet, is now bucking up
against a 1994 law which prohibits any one institution from controlling more than 10 percent of domestic deposits. So Bank
of America may have to shed some of its deposits or seek a liberalization of the statute — certainly not an impossibility for
an institution with its economic and political clout.
Banking marries finance
But just becoming big wasn’t enough. The mega institutions wanted a broader financial role by moving into insurance and
securities. That meant repeal of the Glass-Steagall Act, passed in the wake of the stock market crash of 1929 — a
measure designed to firmly separate banking from securities activities. For years, these and other efforts to expand the
economic role of banks was blocked by Representative Wright Patman, the Texas populist who served as chair of the
House of Representatives Banking Committee.
After Patman’s death, the legislative calendar was dotted with a variety of proposals to deregulate the banks and let them
roam across the financial landscape. Often these proposals failed because of intramural fights involving banking, insurance
and securities industries — each jealously guarding their special niches.
The collapse of the savings and loan industry at a cost of $500 billion to the taxpayers in the 1980s and early 1990s —
plus a post-Depression record number of commercial bank failures — scared the Congress and temporarily cooled the
more radical deregulation proposals. Nonetheless, in 1994, Congress passed the Interstate Banking and Branching Act,
which allowed banks to branch nationwide. As a result, institutions like Bank of America today stretch from coast to coast.
But the big prize of deregulation — expanded powers — was still out of reach. Major deregulation legislation was introduced
in 1982, 1988, 1991, 1995 and 1998. It was like a never ending series of summer television reruns. The legislation was
designed to allow the formation of giant financial conglomerates composed of banks, insurance companies.
In 1999, the deregulatory stars were in alignment. By this time, the legislation had a new and deceptive name, “Financial
Modernization.” Senator Phil Gramm, R-Texas, the truest of true believers in deregulation, was chair of the Senate Banking
Committee. In the House, the Financial Services Committee was headed by Republican Representative Jim Leach of Iowa,
who had only one big concern — that deregulation not go so far as to allow financial institutions and non-financial
companies to combine — the long-standing issue of banking and commerce. Once that was settled, Leach was on board.
The House Commerce Committee shared jurisdiction with the financial services committee, and its chair, Tom Bliley, R-
Virginia, was a cheerleader for deregulation.
The Clinton administration had no problems with pushing for deregulation. Its Secretary of the Treasury, Robert Rubin, who
had been a major player on Wall Street, enthusiastically promoted the legislation. At times, the Clinton administration even
toyed with the idea of allowing a total blurring of the lines between banking and commerce, but was forced to back away
from this radical move after fire from former Federal Reserve Chair Paul Volcker, Leach and the ranking Democratic
member of the Senate Banking Committee, Paul Sarbanes of Maryland.
The banking, securities and insurance corporations — the big ones at least — were beginning to see mutual advantages
and new roads to big bucks in the deregulation scheme. And they saw little to be gained by a prolonged fight over banking
and commerce and everything to be gained by passage of financial modernization.
In 1998, the end of Clinton’s second term as President was on the horizon and financial lobbyists were anxious that the bill
get to the President’s desk before the national political campaign was in full swing. But the bill was floundering. Predictions
of still another in a long tale of failures were beginning to appear.
The upturn in the fortunes of the legislation can be traced to many reasons and many personalities. At the forefront were
John Reed of Citicorp, Sanford Weill of Travelers Insurance Group (who later was to succeed Reed at Citigroup, after Citi
and Travelers merged) and David Komansky of Merrill Lynch. They became familiar figures in the halls of the Senate and
House office buildings.
Big banks, securities firms and insurance companies spent lavishly in support of the legislation in the late 1990s.
During the 1997-1998 Congress, the three industries spent $58 million in the form of campaign contributions, along with
$87 million in soft money contributions to the Democratic and Republican parties and an estimated $163 million in various
lobbying efforts.
While the money certainly helped grease the wheels of the legislative bulldozer, two individuals — Senator Phil Gramm, the
Senate Banking Chair and Federal Reserve Chair Alan Greenspan — were the key to the ultimate passage of “financial
modernization.” Greenspan, a conservative anti-regulation Republican, had no philosophical problems with wiping out
statutory safeguards. More important, he saw an opportunity to strengthen his and the Federal Reserve’s role as the major
overseer of the financial industry. He wanted the role of the Office of the Comptroller of the Currency — which regulated
national banks — diminished and the Federal Reserve firmly installed as the dominant regulator.
To accomplish the goal, Greenspan became a one-man cheerleader for Senator Gramm’s legislation. When the legislation
became snagged on controversial provisions, Greenspan would invariably draft a letter or present testimony supporting
Gramm’s position on the volatile points. It was a classic back-scratching deal that satisfied both players — Greenspan got
the dominant regulatory role and Gramm used Greenspan’s wise words of support to mute opposition and to help assure a
friendly press would grease passage. Deregulation became law in 1999.
Consumers be damned
Proponents of financial modernization had the chutzpah to attempt to sell the legislation as a boon to consumers. Press
releases and testimony were filled with claims that consumers who were supposedly clamoring for large conglomerates
which would be “one stop” financial centers where customers could dabble in a variety of expensive and esoteric financial
transactions. Through the years of hearings, no one ever produced the consumers who were supposedly yearning for one-
stop money shops.
The legislation did nothing to build on the consumer protections which started coming on the scene in the late 1960s.
These efforts produced laws like Truth in Lending — which require that consumers be fully informed of the costs when they
borrow money — along with the Community Reinvestment Act, Home Mortgage Disclosure Act, Equal Credit Opportunity
Act, Fair Housing Act, Fair Credit Reporting Act, Truth in Savings and more recently legislation to protect the privacy of
consumers’ bank records.
The titles of the various consumer protection statutes are impressive. In the real world, the protections have been
diminished by a financial regulatory system which traditionally has been focused on the “care and feeding” of banks, not on
enforcement of protections for bank customers. The saving grace, in some cases, has been the willingness of the Federal
Trade Commission (FTC) to enforce consumer protections while the bank regulatory agencies looked the other way.
The 1977 Community Reinvestment Act, which requires banks to help meet the credit needs in all areas of its communities,
was weakened as part of the modernization scheme. Small banks under $250 million will be subject to CRA examinations
only every four to five years.
That provision has now prompted regulators to propose limiting full CRA examinations to institutions of $1 billion or more in
assets. This means only 428 out of 7,263 banks will be subject to complete exams.
CRA requirements for public hearings of merger applications have given community organizations opportunity to reveal and
protest poor lending performance by banks and gain future commitments. The requirements for hearings are sharply
reduced under financial modernization. The legislation provided no improvement in the ratings of bank CRA performance,
leaving in place a system under which 98 percent of all banks receive satisfactory or outstanding ratings. Presumably if
these ratings were accurate, housing and community development needs would be met fully. Any survey of inner city
housing and depressed rural areas would establish the inflated CRA ratings as gross frauds.
The financial conglomerates created under financial modernization have access to a marketing gold mine in the information
gathered and shared by banks, securities firms and insurance companies. Consumer groups and privacy advocates fought
to ensure that personal records, including medical data, would not become open secrets.
But, in the end, privacy was the loser. All that was left as a protection was a weak “opt out” provision which gave the
conglomerates the right to use and misuse personal data unless consumers took affirmative steps to “opt out” of the
scheme.
In notifying consumers of their rights to opt out of the information sharing, the financial firms set a new record for
obfuscation. Mandatory notices of consumer rights to opt out were often buried among a welter of other enclosures in
billing envelopes and obscured by legal verbiage that only served to confuse.
Regulatory impotence
Even more absurd is the fact that the deregulatory bill was titled “Financial Modernization,” when the financial regulatory
system was left as a disjointed, fragmented and overlapping creature — anything but modern. Four federal banking
agencies and 50 state regulators have jurisdiction over banks. And now the securities powers of the banks also involve the
Securities and Exchange Commission (SEC). As part of this jumbled system, the nation’s monetary policy machinery is
housed in the Federal Reserve, which also serves as a bank regulator.
A study by the Federal Deposit Insurance Corporation (FDIC) pointed to the growing international trend toward a
coordinated regulatory system with monetary policy and bank regulation clearly separated:
“At a time when questions are increasingly being raised in the United States about our fragmented piecemeal system of
financial regulation, in many other countries functional regulation has given way to consolidated supervision by a single
regulator. Although many countries continue to regulate and supervise their financial institutions through multiple entities, in
nation after nation, serious study and thought have been given to devising regulatory arrangements to deal with a new,
more integrated financial world. The trend has been to bring together in one agency financial supervision and regulation of
the major types of financial institutions (banks, securities firms and insurance companies). ... Many nations are achieving
this consolidation by moving the regulatory and supervisory functions outside the central bank.”
But under the rubric of financial modernization, the United States took another step backward into the morass of
overlapping agencies. Instead of moving bank regulation out of the central bank, the Congress anointed the Fed as the
“umbrella” regulator.
The problems created by the regulatory gaps under the present system are not academic. They are illustrated by the
celebrated shenanigans engineered by banks like Citicorp, J. P, Morgan Chase and Merrill Lynch. In the Enron scandal and
in other cases, these banks engaged in various kinds of fraudulent activity in one part of their financial empires in order to
generate profit in another. The breach of the wall between banking, investment banking and insurance led directly to these
abuses.
Senator Carl Levin, D-Michigan, then-chair of the Senate Permanent Subcommittee on Investigations, in 2002 described
the banks’ role this way:
“The evidence shows that Citigroup and Chase actively aided Enron in these transactions, despite knowing they employed
deceptive accounting or tax strategies and were being used by Enron to manipulate its financial statements or deceptively
reduce its tax obligations. Citigroup and Chase received substantial fees for their actions or favorable considerations in
other business dealings.”
Both banks loaned billions of dollars to finance Enron’s deals. And, as Senator Levin bluntly remarked, Merrill Lynch
“assisted Enron in cooking the books.”
All three corporations were major lobbyists for the financial modernization legislation.
At the conclusion of the hearing, Senator Levin stated the obvious:
“There is a regulatory gap right now.”
Yet only three years earlier, Congress and the national media had proclaimed financial regulation” modernized.”
Jake Lewis, a former professional staff member of the Banking, Finance and Urban Affiars Committee of the U.S. House of
Representatives is on staff at the Center for the Study of Responsive Law.
Grand Theft
The Conglomeratization of Media
and the Degradation of Culture
by Ben Bagdikian
For 25 years, a handful of large corporations that specialize in every mass medium of any consequence has dominated
what the majority of people in the United States see about the world beyond their personal experience. These giant media
firms, unlike any in the past, thanks to the hands-off attitude of the Federal Communications Commission (FCC) majority,
are unhampered by laws and regulation. In the process, they have been major agents of change in the social values and
politics of the United States.
They have, in my opinion, damaged our democracy. Given that the majority of Americans say they get their news,
commentary and daily entertainment from this handful of conglomerates, the conglomerates fail the needs of democracy
every day.
Our modern democracy depends not just on laws and the Constitution, but a vision of the real nature of the United States
and its people. It is only humane philosophy that holds together the country’s extraordinary diversity of ethnicity, race,
vastly varied geography and a wide range of cultures. There are imperfections within every individual and community. But
underneath it, we expect the generality of our population to retain a basic sense of decency and kindness in real life.
We also depend on our voters to approach each election with some knowledge of the variety of ideas and proposals at
stake. This variety and richness of issues and ideas were once reflected by competing newspapers whose news and
editorial principles covered the entire political spectrum. Every city of any size was exposed to the early Hearst and E. W.
Scripps newspapers that were the champions of working people and critics of the rich who exploited workers and used their
power to evade taxes. There were middle-of-the-road papers, and a sizeable number of pro-business papers (like the old
New York Sun). They were, of course, a mixed bag. Not a few tabloids screamed daily headlines of blood and guts.
With all of that, the major papers represented the needs and demands of the mass of ordinary people and kept badgering
politicians who ignored them.
Today, there is no such broad political spectrum and little or no competition among media. There is only a handful of
exceptions to the rule of one daily paper per city. On radio and television, Americans see limited ideas and the largest
media groups spreading ever-more extreme right-wing politics, and nightly use of violence and sex that tell parents and
their children that they live in a cruel country. They have made sex a crude commodity as an inexpensive attention getter.
They have made sex, of all things, boring.
Instead of newsboys earlier in the nineteenth century hawking a variety of papers to the people leaving their downtown
factories and offices for home, we have cars commuting between suburbs with radio turned to news of traffic and crime. At
home, TV is the major home appliance. What it displays day and night is controlled by a handful of giant media
conglomerates, heavily tilted to the political right. And all of them have substantial control of every medium — newspapers,
magazines, books, radio, television and movies.
The giant conglomerates with this kind of control are Time Warner, the largest media company in the world; Rupert
Murdoch’s News Corporation, which owns the Fox networks, a steady source of conservative commentary; Viacom, the old
CBS with similarly heavy holdings in all the other important media; Bertelsmann, the German company with masses of U.S.
publications, book houses, and partnerships with the other giant media companies; Disney, which has come a long way
from concentrating on Mickey Mouse and now, in the pattern of its fellow giants, owns 164 separate media properties from
radio and TV stations to magazines and a multitude of other outlets in print and motion picture companies; and General
Electric, owner of NBC and its multiple subsidiaries.
One radio firm, ClearChannel, the sponsor of Rush Limbaugh and other exclusively right-wing commentators, owns 2,400
stations, dwarfing all other radio outlets in size and audience.
In their control of most of our newspapers, the great majority of our radio and television, of our most widely distributed
books, magazines and motion pictures, these conglomerates have cheapened what once was a civilized mix of
programming.
We have large cadres of talented screen writers who periodically complain that they have exciting and touching material
that the networks reject in favor of repetitious junk. These writers do it for the money and could quit, as some of them have.
But they once got paid for writing original dramas like those of Paddy Chayevsky and other playwrights whose work was
heard in earlier days of television.
Programs appealing to the variety of our national tastes and variations in politics are so rare they approach extinction. The
choices for the majority of Americans are the prime-time network shows that range from the relatively harmless petty jokes
and dating games typified by “Seinfeld” to the unrelieved sex and violence of Murdoch’s Fox network and “reality” shows in
which “real people” — that is, non-professional amateurs — are willingly subjected to contests in sexual seduction, deceit
and violation of friendships. Most TV drama is an avalanche of violence.
This is not an appeal for broadcasting devoted solely to the nostalgia of “Andy Hardy” and “Little House on the Prairie.” Nor
is this an appeal for solely serious classics designed for elite audiences (though surely more of such programs would be
good). It is an appeal for a richer variety to meet the range of tastes, regional interests, ethnic documentaries and dramas
for the millions of Americans who embrace memories of “the old country,” as well as other appeals, like of soap operas,
popular music and classical music, lectures.
Here and there, at later hours of the evening, there are occasional book-and-author, actors-and-producers interviews, as
well as talented performers of the contemporary pop forms. But they are rare gems glimpsed through the masses of
stereotyped nightly trash.
A basic root of the problem is two-fold. One is the domination of our broadcasting by a handful of giant media
conglomerates whose performance is measured not just by Nielsen or Arbitron ratings, but what these create on the stock
market, whose major investors’ standards are, “I don’t care how you do it, but if your program doesn’t raise your stock
market prices, your president and CEO will be out of their jobs.”
The other is a Federal Communications Commission which, for the last 30 years, has forgotten its mandated task of making
certain that broadcasters serve “the public interest.” Instead, the present majority members believe that, contrary to
broadcast law, the free market of maximized profits is what constitutes the standard for what is in “the public interest.”
More than 40 years ago, a Commission member, Newt Minow, electrified the industry and most of the listening and viewing
public by describing television programming as a “vast wasteland.” It was a measure of the standards of that day. It is a
measure of today’s standard that this would be ignored as the whining of a crank; and defense of today’s far more bleak
“wasteland” lets the broadcast industry sneer all the way to the bank.
The media giants argue that they are only giving people what they want. But that lost much of its democratic gloss when the
two Democratic minority members of the FCC at the start of the decade held hearings in major cities across the country to
hear what citizens felt about current broadcasting. The hearings were packed with people who testified with seriously
documented complaints that they are not getting what they want, and that more concentration would only make the problem
worse.
Behind these country-wide complaints is the bitter knowledge that, in effect, “The media giants have stolen our property.”
It is Grand Theft.
“Stolen our property” is not just a figure of speech. Communications law established that the American people are the
owners of the radio and television frequencies, not the commercial broadcasters.
The theft is not just of the electromagnetic frequencies on which the giants broadcast. The theft is also of the inherent and
varied needs and wants of the country’s real families and individuals, citizens in the real country.
That loss tells us that we are in danger of losing some part of what we call “America.”
--------------------------------------------------------------------------------
Ben Bagdikian is the author of The New Media Monopoly and other books on the media.
Snapshot for June 17, 2005.
U.S. current account deficit continues to grow to record high
The Bureau of Economic Analysis (BEA) announced today that the current account (the broadest measure of the U.S.
deficit in the trade of goods, services, and payments to the rest of the world) reached an all-time high of $780 billion in the
first quarter of 2005, an increase of 15% over the fourth quarter of 2004. The deficit reached 6.4% of gross domestic
product (GDP), also a record level. The U.S. dollar has declined 14.9% since the first quarter of 2002 (as shown in the
black line of the following graph). The rapid and continuing growth of the current account deficit, despite the sustained
decline in the dollar since the first quarter of 2002, is a major sign of weakness in U.S. traded goods industries.
Unfortunately, the deficit is still likely to get worse in the near term.
The declining dollar should make U.S. exports more competitive and imports more expensive. Thus growth of exports
should accelerate, and the rate of growth of imports should fall. However, because the trade gap is so large, stabilizing or
reducing the trade gap will be very difficult. Imports were 47% larger than exports in the first quarter of 2005. Imports
increased 10.7% in the first quarter (a decrease from the average quarterly rate of 23% in 2004). However, exports
increased only 8.8%. In order to keep the current account gap from growing, exports would have had to increase 78%
faster than they actually did. In other words, exports would have had to increase by 15.6% last quarter just to keep up with
the 10.7% growth of imports. Future exports will have to grow much more rapidly to shrink the current account as a share
of GDP. In order to stabilize or reduce the current account gap, the dollar will have to fall substantially more than it has
since early 2002.
As a nation, we are living beyond our means. A trade deficit must be financed by net borrowing from the rest of the world.
The United States was effectively spending about 6.4% more than it was producing in the first quarter of 2005 (slightly more
than $2 billion every day), but it cannot continue to borrow at such high levels forever. Worse yet, the trade deficit is
growing each year as a share of GDP. The decline in the value of the dollar since February 2002-primarily the 26% decline
against the Euro (which has weakened recently)-has failed to stem the increase in the current account deficit, which has
increased by 1.6 percentage points as a share of real GDP since the first quarter of 2003.
If the dollar were being supported by demand from investors who find the U.S. market attractive, then steady growth in
capital inflows from private investors to finance rising deficits would likely occur. However, private inflows have been
insufficient to finance the U.S. current account deficit for the last three years. Instead, foreign governments have served as
lenders of last resort, purchasing substantial volumes of U.S. government assets. The BEA reported today that these
purchases equaled an annual rate of about $100 billion in the first quarter of 2005.
A bloc of Asian governments made purchases equal to 132% of all net government purchases of U.S. assets in the first
quarter of 2005. Thus, these governments were willing to offset net official sales of U.S. assets by governments in the rest
of the world. The unwillingness of other foreign governments to continue holding large stocks of U.S. government assets
highlights the determination of Asian governments to serve as lenders of last resort in financial markets. These
governments-especially China, Japan and Korea-are willing to absorb the risks of financial losses from an ultimate decline
in the dollar in order to make their exports more competitive against U.S. products. If these governments had not been
intervening in foreign exchange markets, then the dollar would have fallen much more than it has since 2002. In fact, most
of the dollar's decline occurred in 2002-03-in the past year the real value of the dollar has only fallen 0.5%. The dollar
would have declined much more rapidly, especially against Asian currencies, if there had been no foreign government
intervention in currency markets. If the dollar did decline fully, the prospects for stabilizing or shrinking the U.S. current
account deficit would be greatly improved.
Today's Snapshot was written by EPI economist Robert E. Scott with research assistance from David Ratner.
Statement of Chellie Pingree, President, Common Cause On Redistricting in California
June 29, 2005
Contact: Mary Boyle
(202) 736-5770
In California and around the country we have a broken redistricting system where elected officials are choosing the voters
they want to represent. For decades partisan wrangling has led to gerrymandered redistricting maps with the major political
parties working together to create safe Congressional and legislative districts where elected officials are virtually assured of
re-election. That system does more to protect the interests of incumbents than to serve the voters. We need to put the
power to draw political lines in the hands of independent, nonpartisan commissions and we need strong and fair criteria for
drawing the districts. This will put the power back in the hands of the voters.
That's why Common Cause announced in February that we were working with Governor Schwarzenegger to reform
California's flawed redistricting process. We said at that time that the best solution to this problem would be the result of
negotiations between the Governor and the legislature. We still believe that to be true. And there is still time.
That time is now. It is too important to wait any longer. That is why we are happy to be standing here today with legislators
of both parties to discuss an amendment that represents a big step in the right direction. We commend Majority Leader
Romero, Democratic Caucus Chair Kevin Murray, Senator Ashburn and Senator Lowenthal who has worked tirelessly for a
solution to this problem. We also want to commend Senate President Pro-Tem Perata whose leadership on this issue is
critical.
This proposal is not perfect, but none ever is. But it does remove the process directly from the hands of legislators, and
would ensure that the process be guided by many of the criteria which we have previously called for.
It's time to put an end to this rotten system. That's why we joined Governor Schwarzenegger back in February, and that is
why we are here with legislative leaders today to call once again for the passage of meaningful redistricting reform. We
urge California Legislators of both parties and the Governor to come together to fix the state's broken redistricting process.
Common Cause has been pushing for 30 years to establish independent commissions with fair and clear criteria to do the
work of redistricting. We will continue to work with fair-minded Republicans, Democrats and others to fix this problem. It is
too important to wait any longer. We need to put the power to draw political lines in California, and across the country (in
Florida, and in Texas), in the hands of truly independent commissions and we need to put the power of the vote back in the
hands of the voter. We are glad to be here today, standing with these lawmakers to continue to push this effort as part of
our multi-state campaign to reform how state legislative and Congressional districts are drawn.
VOTING RIGHTS GROUPS URGE CARTER-BAKER ELECTION
COMMISSION TO OPPOSE NATIONAL VOTER IDENTIFICATION CARD
"A remedy in search of a problem that could deny millions of eligible voters their right to vote."
June 29, 2005
NATIONAL- A group of civil and voting rights organizations issued the following statement today urging the recently-formed
Commission on Federal Election Reform to reject any consideration of a national voter identification card. The Commission,
co-chaired by former President Jimmy Carter and former Secretary of State James Baker III, is expected to discuss a
national ID card recommendation at their June 30 hearing at the Baker Center in Houston, Texas.
We wish to express to the Commission our strong opposition to a national voter identification card system. The voting rights
community believes that the adoption of a national voter ID card would likely result in the disfranchisement of millions of
eligible voters and risk undermining basic privacy protections that are the hallmarks of American citizenship. In addition, a
national voter ID card would prove exceedingly complex, costly and burdensome to implement and maintain.
Indeed, a national voter ID card would only frustrate the advances that Congress sought to achieve with the enactment of
the Help America Vote Act of 2002. We urge the Commission to reject consideration of a national voter ID card system.
We oppose a national voter ID card for the following reasons:
A national voter ID card is a remedy in search of a problem.
Proponents of voter ID requirements often argue that they are necessary to prevent voter fraud. The fact is there is zero
evidence of widespread fraud among voters who personally appear at the polls. Hearsay and urban myth have taken the
place of sound research during critical policy deliberations. An extensive inquiry into election fraud from 1992 to 2002,
published in Demos' 2003 Securing the Vote report, found that its incidence is minimal across the fifty states and rarely
affects election outcomes.
A more recent, exhaustive hunt for "thousands" of fraudulent votes in Washington State last year succeeded in uncovering
six instances of double voting. Some in Ohio's statehouse alleged widespread voter fraud and abuse in 2004, but a survey
of Ohio's 88 counties released by the Coalition on Homelessness and Housing in Ohio and the League of Women Voters of
Ohio on June 14, 2005 unearthed just four instances of ineligible or fraudulent voting in the state's 2002 and 2004 general
elections, out of 9 million votes cast.
A national voter ID card would create new barriers to voting.
Indiana, Georgia and Arizona have enacted new voter ID requirements in recent months that will suppress voting among
eligible voters, particularly seniors, the poor, racial minorities, people with disabilities and urban residents. Members of
these communities are least likely to own motor vehicles and possess a driver's license-the most commonly accepted form
of identification. According to disability advocates nearly 10 percent of the 40 million Americans living with disabilities do not
have a driver's license or other form of state-issued photo ID. A new study by the Employment and Training Institute at the
University of Wisconsin-Milwaukee finds that people of color and seniors in Wisconsin between the ages of 18 and 65 lack
a driver's license at rates far higher than do white residents. In Georgia, the state chapter of the American Association of
Retired Persons estimates that 36 percent of Georgia residents 75 or older do not possess a driver's license. A study
conducted by a task force of the earlier Carter-Ford National Commission on Election Reform reported that 6 percent to 10
percent of the existing American electorate lacked any form of state ID in 2001.
State residents who do not drive and now need to obtain a state ID card in order to vote confront difficult, time-consuming
and expensive challenges. The same can be expected should a national voter ID card become a necessary prerequisite for
voting.
A national voter ID requirement will lead to discriminatory implementation.
The 2001 Carter-Ford National Commission on Election Reform found that identification provisions at the polls are
selectively enforced. Even in places that do not require voters to show ID, poll workers are known to ask certain voters to
prove their identity, in many cases demanding ID from minority voters but not whites.
A national voter ID card is legally questionable and challenges established voting rights law.
Voter ID requirements make it more difficult for citizens to exercise their right to vote and increase the chance that eligible,
registered voters will be denied their fundamental right to cast a ballot. As such, they violate provisions of the Voting Rights
Act and the U.S. Constitution.
Implementing a national voter ID card would be exceedingly complex and costly.
Introduction of a national voter ID card will replicate the extreme challenges that states now confront in implementing the
new REAL ID Act. The bill, passed by Congress in May 2005, requires state DMVs to verify documents used to establish
identity and produce federally uniform IDs by 2008-a Herculean task given that there are more than 14,000 types of birth
certificates and personal documentation currently in circulation.
States or the federal government will likely need to spend billions of dollars to implement REAL ID. When it "goes live," the
system's database will become an attractive target for identity thieves and others, imposing unknown but significant new
security and maintenance costs. Congress has appropriated no funds for this system; where that money will come from is a
mystery.
Similar threats and costs would come with a national voter ID system. But there is the potential for an additional, significant
problem with a national voter ID: with a voting-age population of over 200 million individuals in the U.S., even an error rate
of 1 percent could lead to the disfranchisement of 2 million voters.
An ID card system will lead to a slippery slope of surveillance, citizen monitoring and "internal passports."
A national ID card system, backed up by the full power of modern computer and database technology, could log the time
and a person's specific location with every ID check. How long before office buildings, doctors' offices, gas stations,
highway tolls, subways and buses incorporate the ID card into their security or payment systems for greater efficiency? The
end result could be a nation where citizens' movements inside their own country are monitored and recorded through these
"internal passports."
A national voter ID card system would significantly diminish freedom and privacy in the U.S. Once put in place, it is unlikely
that such a system would be restricted to its original purpose. Social Security numbers, for example, were originally
intended to be used only to administer the retirement program. But that limit has been routinely ignored and steadily
abandoned over the past 50 years. A national voter ID system would threaten the privacy that Americans have always
enjoyed and gradually increase the control that government and business wields over everyday citizens.
Given the growing technological and legislative threats to privacy, this is not a system that the U.S. should consider.
The Carter-Baker Commission should offer real solutions to real election problems.
This Commission speaks with a unique voice in the discussion about how the United States can build an electoral system
that best responds to the will of the voters. It is therefore essential that in making recommendations, the Commission
responds to the convincing evidence of pervasive problems facing American voters.
In so doing, it should offer policy recommendations or remedies that address real problems, and should not fuel an ill-
informed state and national legislative debate on ID without a thorough evaluation of the impact it will have on voting rights
and the electoral system in the U.S.
Although national voter ID cards have been successful in other countries, that success has often been possible due to
centrally controlled, uniform election practices that are quite different from the decentralized, hyper-federalized system
practiced in the United States.
We believe that Americans must have equal access to the political decision-making process, and request that this
Commission recommend changes to the electoral system that will make it easier for all eligible citizens to have access to the
ballot, instead of policy that will chip away at the progress this country has made in improving democracy by expanding the
franchise.
Opposition to a national voter ID requirement in the United States is voiced by voting and civil rights organizations around
the country, including the following groups that have signed a letter to the Carter-Baker Commission on Federal Election
Reform:
American Association of People with Disabilities, American Civil Liberties Union, Appleseed, Asian Law Alliance, Asian
Pacific American Legal Center, Association of Community Organizations for Reform Now (ACORN), Brennan Center for
Justice at NYU Law School, Common Cause, Demos: A Network for Ideas & Action, Lawyers' Committee for Civil Rights
Under Law, Leadership Conference for Civil Rights, League of United Latin American Citizens, Mexican American Legal
Defense Education Fund, Na Loio - Immigrant Rights and Public Interest Legal Center, National Asian American Pacific
Islander Mental Health Association, National Asian, Pacific American Legal Consortium, National Association of Protection
and Advocacy Systems, National Conference of American Indians, National Voting Rights Institute, Native Vote Election
Protection Program, New York Association for Gender Rights Advocacy, People For the American Way, Project Vote, Rock
the Vote, and South Asian American Voting Youth.
For more information: www.demos.org/voterid
Force of July
Bush may rue the day he rams John Bolton through with a recess appointment.
By Robert Kuttner
Web Exclusive: 06.30.05
Print Friendly | Email Article
The bitterly contentious nomination of John Bolton to be UN ambassador comes to a showdown this holiday weekend.
With the Senate having twice refused to break a filibuster over Bolton, President Bush may use his power to make a recess
appointment during Congress's Fourth of July break. Bolton would then serve without Senate confirmation until the next
Congress ends, in late 2006.
Or Bush could withdraw Bolton's name.
Bolton's views on the UN are hostile. He is known as a short-tempered martinet. He got poor reviews for his last job as
undersecretary of state for arms control. For instance, Bolton was a skeptic of a U.S. joint program to keep Russian nuclear
fuel from reaching terrorists. The effort was tied up in legal minutiae during Bolton's tenure, but soon after Bolton's
departure early in 2005, the logjam was broken and agreement with Russia reached.
The Washington Post reported that our allies so distrust Bolton on the sensitive negotiations over Iran's nuclear program
that they made sure to exclude him from high-level meetings in Washington last January.
More ominously, Bolton is suspected of using ultra-secret National Security Agency wiretaps to snoop on rivals in the
intelligence and defense community. Democrats on the Senate Foreign Relations Committee led by Senator Joe Biden of
Delaware demanded to know the names of people on whom Bolton requested wiretapped information. For anything but
legitimate national security purposes, this use would violate U.S. law. But the White House has stonewalled this request,
intensifying Democrats' opposition.
As the Senate debated Bolton, Senator Pat Roberts, a Kansas Republican, declared that a recess appointment ''would
weaken not only Mr. Bolton but also the United States," but he soon recanted, very likely after some prodding. His first
impulse was right. This recess appointment would insult both Republicans and Democrats in the Senate, and the institution
itself.
Bolton would be serving for less than 18 months. He would not be taken seriously by other diplomats. The House recently
passed a resolution withholding half the U.S. dues contribution to the UN, pending reforms. Even the Bush administration
opposes this heavy-handed ploy. Given Bolton's own extreme views and volcanic temperament, he is about the last person
to negotiate the delicate domestic and international politics of shoring up the UN.
Bolton dearly wanted to be deputy secretary of state. But Condoleezza Rice, who has appointed diplomatic professionals to
all the senior posts at State, made sure that would not happen. One well-placed source suggests that Bolton had to be
talked into taking the UN job, presumably by Vice President Cheney, his close ideological ally. Bolton would be the last
neocon in a senior post.
Bush's behavior suggests that Bolton himself might not want to take the job under a cloud. After the Senate GOP leader,
Bill Frist, declared that he lacked the votes to break a filibuster, Bush summoned Frist to the White House and told him to
try again.
In a humiliation for Frist, the Republican leadership on June 21 mustered only 54 votes, three fewer than on the first
attempt and six less than required, with George Voinovich of Ohio voting no. Some observers ask: Why would Bush make
this desperation move if the White House and Bolton were willing to use a recess appointment all along? But Bush may plow
ahead anyway.
It is ironic that Bush may run roughshod over the legislature, on the very holiday that celebrates our liberty, and at a time
when we are urging fledging democracies to protect minority rights.
The Constitution provided the recess appointment prerogative mainly for emergencies before there were year-round
sessions of Congress, when senators traveled to Washington by horse and buggy. In modern times, recess appointments
are infrequent, usually made when Congress is out of session, almost never over a short holiday break.
This nomination can't win Senate approval because of Bolton's own extremism. It is the latest case of Bush overreaching in
his second term.
Like the faltering Social Security initiative, another emblematic Bush overreach, the Bolton nomination also produced rare
Democratic discipline and unity. It stimulated a lot of citizen activism, including a campaign by 102 former senior diplomats
opposed to Bolton, mostly appointees of Republicans Nixon, Ford, Reagan, and Bush I.
John Bolton is damaged goods. If he does take the UN job without the Senate's blessing, Bush's victory will be Pyrrhic.
Robert Kuttner is co-editor of The American Prospect. This column originally appeared in the Boston Globe.
Copyright © 2005 by The American Prospect, Inc. Preferred Citation: Robert Kuttner, "Force of July", The American
Prospect Online, Jun 30, 2005. This article may not be resold, reprinted, or redistributed for compensation of any kind
without prior written permission from the author. Direct questions about permissions to permissions@prospect.org.
Key figures
To the left are some of neoconservatism's most influential leaders. Click on a person to learn about his background.
Irving Kristol
Widely referred to as the "godfather" of neoconservatism, Mr. Kristol was part of the "New York Intellectuals," a group of
critics mainly of Eastern European Jewish descent. In the late 1930s, he studied at City College of New York where he
became a Trotskyist. From 1947 to 1952, he was the managing editor of Commentary magazine, later called the "neocon
bible."
By the late 1960s, Kristol had shifted from left to right on the political spectrum, due partly to what he considered excesses
and anti-Americanism among liberals. Kristol built the intellectual framework of neoconservatism, founding and editing
journals such as tTe Public Interest and The National Interest.
Kristol is a fellow at the American Enterprise Institute and author of numerous books, including "Neoconservatism: The
Autobiography of an Idea." He is the father of Weekly Standard editor and oft-quoted neoconservative William Kristol.
Norman Podhoretz
Considered one of neoconservatism's founding fathers, Mr. Podhoretz studies, writes, and speaks on social, cultural, and
international matters. From 1990 to 1995, he worked as editor-in-chief of Commentary magazine, a neoconservative journal
published by the American Jewish Committee. Podhoretz advocated liberal political views earlier in life, but broke ranks in
the early 1970s. He became part of the Coalition for a Democratic Majority founded in 1973 by Senator Henry "Scoop"
Jackson and other intervention-oriented Democrats.
Podhoretz has written nine books, including "Breaking Ranks" (1979), in which he argues that Israel's survival is crucial to
US military strategy. He is married to like-minded social critic Midge Decter. They helped establish the Committee on the
Present Danger in the late 1970s and the Committee for the Free World in the early 1980s. Podhoretz' son, John, is a New
York Post columnist.
Paul Wolfowitz
After serving as deputy secretary of defense for three years, Mr. Wolfowitz, a key architect of the Iraq war, was chosen in
March 2005 by President Bush to be president of the World Bank.
From 1989 to 1993, Wolfowitz served as under secretary of defense for policy in charge of a 700-person team that had
major responsibilies for the reshaping of military strategy and policy at the end of the cold war. In this capacity Wolfowitz co-
wrote with Lewis "Scooter" Libby the 1992 draft Defense Planning Guidance, which called for US military dominance over
Eurasia and preemptive strikes against countries suspected of developing weapons of mass destruction. After being leaked
to the media, the draft proved so shocking that it had to be substantially rewritten.
After 9/11, many of the principles in that draft became key points in the 2002 National Security Strategy of the United
States, an annual report. During the 1991 Gulf War, Wolfowitz advocated extending the war's aim to include toppling
Saddam Hussein's regime.
Richard Perle
Famously nicknamed the "Prince of Darkness" for his hardline stance on national security issues, Mr. Perle is one of the
most high-profile neoconservatives. He resigned in March 2003 as chairman of the Pentagon's Defense Policy Board after
being criticized for conflicts of interest. From 1981 to 1987 he was assistant secretary of defense for international security
policy.
Perle is a chief architect of the "creative destruction" agenda to reshape the Middle East, starting with the invasion of Iraq.
He outlined parts of this agenda in a key 1996 report for Israel's right-wing Likud Party called "A Clean Break: A New
Strategy for Securing the Realm."
Perle helped establish two think tanks: The Center for Security Policy and The Jewish Institute for National Security. He is
also a fellow at the American Enterprise Institute, an adviser for the counter-terrorist think tank Foundation for the Defense
of Democracies, and a director of the Jerusalem Post.
Douglas Feith
The defense department announced in January 2005 that Mr. Feith will resign this summer as undersecretary of defense
for policy, the Pentagon's No. 3 civilian position, which he has held since being appointed by President Bush in July 2001.
Feith also served in the Reagan administration as deputy assistant secretary of defense for negotiations policy. Prior to
that, he served as special counsel to Richard Perle. Before his service at the Pentagon, Feith worked as a Middle East
specialist for the National Security Council in 1981-82.
Feith is well-known for his support of Israel's right-wing Likud Party. In 1997, Feith was honored along with his father Dalck
Feith, who was active in a Zionist youth movement in his native Poland, for their "service to Israel and the Jewish people" by
pro-Likud Zionist Organization of America at its 100th anniversary banquet. In 1992, he was vice president of the advisory
board of the Jewish Institute for National Security Affairs. Mr. Feith is a former chairman and currently a director of the
Center for Security Policy.
Lewis "Scooter" Libby
Mr. Libby is currently chief of staff and national security advisor for Vice President Dick Cheney. He's served in a wide
variety of posts. In the first Bush administration, Mr. Libby served in the Department of Principal Deputy Under Secretary
(Strategy and Resources), and, later, as Deputy Under Secretary of Defense for Policy.
Libby was a founding member of the Project for the New American Century. He joined Paul Wolfowitz, William Kristol, Robert
Kagan, and others in writing its 2000 report entitled, "Rebuilding America's Defenses - Strategy, Forces, and Resources for
a New Century."
Libby co-authored the once-shocking draft of the 'Defense Planning Guidance' with Mr. Wolfowitz for then-Defense
Secretary Dick Cheney in 1992. Libby serves on the advisory board of the Center for Russian and Eurasian Studies of the
RAND Corporation.
John Bolton
In February 2005, Mr. Bolton was nominated US ambassador to the UN by President Bush. If confirmed, he would move to
this position from the Department of State where he was Under Secretary for Arms Control, the top US non-proliferation
official. Prior to this appointment, Bolton was senior vice president of the neoconservative think tank American Enterprise
Institute. He also held a variety of positions in both the George H. W. Bush and Ronald Reagan administrations.
Bolton has often made claims not fully supported by the intelligence community. In a controversial May 2002 speech
entitled, "Beyond the Axis of Evil," Bolton fingered Libya, Syria, and Cuba as "other rogue states intent on acquiring
weapons of mass destruction."
In July 2003, the CIA and other agencies reportedly objected strongly to claims Bolton made in a draft assessment about
the progress Syria has made in its weapons programs.
Elliott Abrams
In February of 2005 Elliott Abrams was appointed deputy assistant to the president and deputy national security adviser for
global democracy strategy. From December 2002 to February 2005, Mr. Abrams served as special assistant to the
president and senior director for Near East and North African affairs.
Abrams began his political career by taking a job with the Democratic Senator Henry M. "Scoop" Jackson. He held a variety
of State Department posts in the Reagan administration.
He was a senior fellow at the Hudson Institute from 1990 to the 1996 before becoming president of the Ethics and Public
Policy Center, which "affirms the political relevance of the great Western ethical imperatives." Abrams also served as
chairman of the US Commission on International Religious Freedom.
In 1991, Abrams pleaded guilty to withholding information from Congress about the Iran-Contra affair. President George H.
W. Bush pardoned him in 1992. In 1980, he married Rachel Decter, daughter of neocon veterans Norman Podhoretz and
Midge Decter.
Robert Kagan
Mr. Kagan writes extensively on US strategy and diplomacy. Kagan and fellow neoconservative William Kristol co-founded
the Project for a New American Century (PNAC) in 1997. Kagan signed the famous 1998 PNAC letter sent to President
Clinton urging regime change in Iraq.
After working as principal speechwriter to Secretary of State George P. Shultz from 1984-1985, he was hired by Elliott
Abrams to work as deputy for policy in the State Department's Bureau of Inter-American Affairs.
He is a senior associate at the Carnegie endowment for International Peace (CEIP). He is also an international affairs
columnist for The Washington Post, and contributing editor at The New Republic and The Weekly Standard. He wrote the
bestseller "Of Paradise and Power: America and Europe in the New World Order." Kagan's wife, Victoria Nuland, was
chosen by Vice President Dick Cheney as his deputy national security adviser.
Michael Ledeen
Seen by many as one of the most radical neoconservatives, Mr. Ledeen is said to frequently advise George W. Bush's top
adviser Karl Rove on foreign policy matters. He is one of the strongest voices calling for regime change in Iran.
In 2001, Ledeen co-founded the Coalition for Democracy in Iran. He served as Secretary of State Alexander Haig's adviser
during the Reagan administration. Ledeen is resident scholar in the Freedom Chair at the American Enterprise Institute,
where he works closely with Richard Perle. he is also a member of the Jewish Institute of National Security Affairs' advisory
board and one of its founding organizers.
He was Rome correspondent for the New Republic magazine from 1975-1977, and founding editor of the Washington
Quarterly. Ledeen also wrote "The War Against the Terror Masters," which advocates regime change in Iraq, Syria, and
Saudi Arabia.
William Kristol
Son of "godfather" of neoconservatism Irving Kristol, Bill Kristol is currently chairman of the Project for a New American
Century, which he co-founded with leading neoconservative writer Robert Kagan. He is also editor of the influential Weekly
Standard.
Like other neoconservatives Frank Gaffney Jr. and Elliott Abrams, Kristol worked for hawkish Democratic Sen. Henry
"Scoop" Jackson. But by 1976, he became a Republican. he served as chief of staff to Education Secretary William Bennett
during the Reagan administration and chief of staff to former Vice President Dan Quayle during the George H. W. Bush
presidency.
Kristol continuously called for Saddam Hussein's ouster since the 1991 Gulf War. With the like-minded Lawrence Kaplan,
Kristol co-wrote "The War Over Iraq: Saddam's Tyranny and America's Mission." He is on the board of advisers of the
Foundation for the Defense of Democracies, established as a counterterrorist think tank after 9/11.
Frank Gaffney Jr.
Mr. Gaffney is the founder, president, and CEO of the influential Washington think tank Center for Security Policy, whose
mission is "to promote world peace through American strength."
In 1987, President Reagan nominated Gaffney to be assistant secretary of defense for international security policy. he
earlier served as the Deputy Assistant Secretary of Defense for Nuclear Forces and Arms Control Policy under then-
Assistant Secretary Richard Perle. In the late 1970s, Gaffney served as a defense and foreign policy adviser to Sen. Henry
"Scoop" Jackson.
He is columnist for the Washington Times and a contributor to Defense News and Investor's Business Daily. He is a
contributing editor to National Review Online, WolrdNetDaily.com and JewishWorldReview.com. Gaffney is also one of 25
mostly neoconservative co-signers of the Project for a New American Century's Statement of Principles.
