By Mitch Gurney
October 25, 2010
Some folks may have a Pollyanna view of our political system but when it comes to the mix of politics, money, and human greed I don’t. Wealth equals political power and more wealth equals more power. Election season is a perfect time for the wealthy, corporations, lobbyist, and other special interest to buy favors. Following the Supreme Court’s Citizens United ruling earlier this year the floodgate of campaign funds now has no limits with much of this activity lacking transparency as contributors remain mostly anonymous. Heaven help those of us who are not wealthy, which is the majority of the citizens of this nation. I’ve written about this problem a few times, ‘Government for Sale’ and ‘Politicians don’t REALLY want you to know whose buying our Elections.’
Following the court’s decision Congress attempted to pass legislation, The Disclose Act which sought to lift the veil of secrecy and bring more transparency to campaign funding but it met with defeat in the Senate after passing the House, as I wrote about in ‘Politicians don’t REALLY want you to know.’ If campaign contributions and lobbying isn’t sinister as some claim one would think bringing transparency to such activity would not be a partisan issue but obviously it is. Why did the Republicans in the House and a few Democrats vote against the Act? And in the Senate, why did the Republicans filibuster the Act? What are Republicans afraid of?
Currently there is a big debate over whether foreign interest may be influencing our elections which has turned into finger pointing between candidates and special interest as to who is and who is not revealing their contributors. Because the Disclose Act didn’t pass they’re not required to. Another part of the debate is over allegations that foreign money flowing through the U.S Chamber of Commerce is being used in contributing to this year’s elections and without transparency there is no way to prove these allegations. All this finger pointing is beyond the point and the debate should actually be over the lack of transparency. We need to know who is buying our elections – period end of discussion. Any elected official should be a steward of respectable and honest policy and the Disclose Act or something similar should be standard practice. If the counter argument is that the measure was flawed, well fix the damn thing. The following chart shows the flow of campaign money and who gets what following the court’s ruling:
The midterm elections are just a little more than a week away and the thirst for money is in high gear and a floodgate of funds are flowing into candidate’s coffers with plenty of strings attached. With these lovely factors in mind, let’s take a look at a couple of possible big issues that might top the list for corporations and other special interest.
Big business and the Obama administration have not danced to well lately and I wrote about this in ‘Hey Mister can you Spare me a Job?’ I suspect the split has something to do with Obama Seeks End of Corporate Tax Break to raise $190 Billion.
Open Secrets.org reports the U.S Chamber of Commerce has stepped up its spending in Washington:
The massive business association has now spent more than $81.3 million on lobbying this year, easily earning its spot as the No. 1 spender between January and September. (Many other organizations and companies report spending using narrower definitions of lobbying, detailing only federal-level activities, while the Chamber reports spending on federal, state and grassroots lobbying.)
Businesses, like most of us, like to avoid paying taxes and are legally very successful at doing so. ABC reports that many companies are utilizing legal tax loops to shelter income, Google and Other U.S. Companies Dodge Billions in Taxes, Bloomberg Reports;
Google and other U.S. companies are using legal corporate tax loopholes to avoid paying the U.S. Treasury billions of dollars in corporate income taxes every year, according to a new report by Bloomberg News.
“Over the last three years, Google has saved over $3 billion,” said Bloomberg reporter Jesse Drucker, who broke the story.
Keeping those legal loopholes in place would be a big favor. It’s a small wonder why Big Business doesn’t like the Obama Administration.
The events surrounding the foreclosure crisis continues to unfold. There are a boat load of issues as most know and as I’ve written about in ‘The Foreclosure Crisis, No Big Deal Right? Think Again’ and ‘Understanding the Foreclosure Mess.’ As I wrote in ‘Understanding the Foreclosure Mess’ the bigger problem may exist in the financial losses banking firms could suffer should they be forced by investors to repurchase soured mortgage bonds. A recent Bloomberg reported in Mortgage Mess: Shredding the Dream:
Even if the documentation problems turn out to be manageable—as Bank of America and others insist they will be—the economy will still suffer long-term consequences from the loose underwriting that caused the subprime housing bubble. According to an Oct. 15 report by J.P. Morgan Securities, some $2 trillion of the $6 trillion in U.S. mortgages and home-equity loans that were securitized during the height of the bubble, from 2005 through 2007, are likely to go into default. The report says the housing bust will ultimately cause losses of $1.1 trillion on those bonds. For additional commentary please see this article .
Despite that news of this crisis just broke a few weeks ago just ahead of the elections it appears some lending institutions may have known they had a documentation problem going back to at least 2003. Please consider as a case in point the story told in Mortgage Mess: Shredding the Dream which profiles the case of Joseph Lents who has been in default on his $1.5 million Florida home for 8 years and is still living in his home because no one can produce the note:
In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage
The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents’ promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious: “When you say you lose a $1.5 million negotiable instrument—that doesn’t happen.” DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn’t prove it held his mortgage, it couldn’t foreclose.
Eight years after defaulting, Lents still hasn’t made a payment or been forced out of his house. More…
As that story indicates some lending institutions were encountering documentation issues as early as 2003. While Lent’s case may be rare the situation in many respects reveals the depth of the ethical breakdown in our country.
Should actual Bank losses ultimately range upwards of $1.1 trillion or more this could potentially lead to another round of government bailouts, placing a very big political favor on the campaign agenda.
A CBS report, relying on information available via Opensecrets.org, Record Spending Amount for Midterm Election:
In campaign 2010, we’re down to the last eleven days in the battle for control of Congress. And the money being spent this year is phenomenal — nearly one billion dollars so far on House races alone.
Nearly one billion dollars chasing more than 182 million potential voters – that works out to at least $5 a voter.
In terms of election money — there’s never been anything like it. The conservative group American Crossroads has spent nearly a quarter million dollars per day this month.
Sheila Krumholz of the Center for Responsive Politics predicts “$3.7 billion will be spent on this midterm election.” More…Also see: Big Election Spenders Revealed
Additional articles via Opensecrets.org:
Midterm elections often result in a shift in the balance of power in Congress between the two parties. Poor national economic situations as we have now places tremendous pressure on the incumbent party to hold onto their power base. About.com provides a historical guide for the Balance Of Power between Congress and the Presidency 1945-2010, and points out:
Contrary to popular belief, most of the time (in modern political history) Congress and the President are at odds; that is, most of the time the same political party does not control the White House, the Senate, and the House of Representatives. Only 10 times (20 years) since 1945 have both branches of Congress and the Presidency been controlled by the same party.
However, most of the time, Congress has been controlled by the same party. The “odd man out” has literally been the President. Since 1945, the House and Senate have been controlled by different parties only five times (10 years). And there have been only two complete turn-overs of Congress since 1945: one in 1949 and the other in 2007. More, plus scroll down to chart
Obviously the stakes in this election are very high. If the polls are to be trusted Democrats are in serious jeopardy and could lose control of the Senate and the House. If the Republicans regain control of Congress it will be their turn to pay up on the political contribution tab. But electorates who hold on to the illusion that things will change could be very disappointed if history serves as any measure.