As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Saturday, July 25, 2009

More Evidence Of Goldman Sachs' Blood Funnel

I saw Bill Maher offer Matt Taibbi some pushback last night about his Rolling Stone piece on Goldman Sachs. Maher wasn't willing to believe that Goldman has been uniquely positioned to profit from the breakdown of the financial system and the various bubbles created. Maher offered the predictable "why just Goldman" response, and Taibbi decided to talk about the many Goldman officials in high positions in the government. He could have just pointed to this story that leaped from Zero Hedge to the New York Times yesterday.

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets [...]

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.

And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage.

Yet high-frequency specialists clearly have an edge over typical traders, let alone ordinary investors. The Securities and Exchange Commission says it is examining certain aspects of the strategy.

“This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage.”

They literally place their super-fast computers physically close to the machines that govern NYSE trades, to get the jump on competitors and make enough pennies off of the brief ups and downs of stocks to rake in mounds of cash. And in some cases, investors can buy access to buy and sell order information on certain exchanges that can be used to make these quick orders. When Chuck Schumer is calling for an investigation of Wall Street, you know something has gone horribly wrong.

No, Goldman Sachs is not the only organization profiting from this scheme, or any of the numerous others. But their name keeps surfacing among those that are, in pretty much every case. I don't know how much evidence it takes to understand their role in all of this. Taibbi may not have gotten every single solitary thing right in his very long piece, but he got enough right to make some very powerful people nervous. And rightly so.

We need to go further in determining what caused this financial crisis and what pitfalls remain. The new iteration of the Pecora Commission, a Depression-era panel that uncovered the origins of that crisis, can lead the way.

We, the undersigned, call on you to fulfill the responsibilities of your position by joining together in non-partisan cooperation to investigate the origins of the financial crisis in ways that lead to a full understanding of the institutions, people and practices that are responsible for our economic collapse.

In particular, we encourage the adoption of three guidelines that history has taught us are essential to an effective inquiry:

Appoint a single investigator. This individual must have a proven record of exposing fraudulent elites and institutions, and must provide a professional, non-political spirit to the investigation.

Afford no special treatment. No one is off-limits or gets special protection in the investigation.

Provide the tools to do the job. The investigator must be given ample budget and time, full subpoena authority, and the ability to hire and fire staff.

These principles were applied in the 1930s when Congress launched a formal inquiry into the causes of the Great Depression. That commission - led by Ferdinand Pecora - was willing to reach into the highest levels of Wall Street and finance to determine the causes of the economic collapse of 1929. The courage with which the commission greeted its task - and the revelations that courage ensured - inspired the sweeping banking and financial reforms that were the bedrock of our financial system for decades.

Building a new financial foundation requires us to begin on solid ground - the truth. It is only by illuminating the mistakes of the past that we will be able to meet the great challenges of the future.

And they can start by photocopying Matt Taibbi's notes.

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In Praise Of Lobbyists?

If you haven't been following the health care debate, this AP article will strike you as curious.

A strong force, perhaps as powerful in Congress as President Barack Obama, is keeping the drive for health care going even as lawmakers seem hopelessly at odds.


The drug industry, the American Medical Association, hospital groups and the insurance lobby are all saying Congress must make major changes this year. Television ads paid for by drug companies and insurers continued to emphasize the benefits of a health care overhaul — not the groups' objections to some of the proposals.

Why on Earth would the drug industry, insurance industry, hospital industry and the AMA be so interested in protecting the passage of health care reform? Because they would all grab some goodies in the process. As a result of all those meetings with health industry executives, the President secured their support for reform. But it came at a price. The drugmakers got to extend their patents for biologics and didn't have to completely fill the doughnut hole for Medicare Part D. The insurance industry got their individual mandate that will require millions of Americans to sign up for their coverage. The AMA got the sustainable growth rate (SGR) formula for Medicare physician reimbursement dumped, which will likely increase their payments. And hospitals are working hard for their piece of the pie as well. All of these deals, which constrict the ability for Congress to wring more costs out of the system, would fall apart if no reform bill passes, leaving these interests vulnerable. So of course they want the process to advance. Yet if you take the Blue Dogs at their word, that they are concerned about costs, these deals are INHIBITING progress, not promoting it.

Deals, of course, are made to be broken, and Nancy Pelosi, who didn't sign on to any of them, will not adhere to their guidelines if it risks cost control.

House Speaker Nancy Pelosi said Thursday that she doesn't feel bound by the $235 billion in deals that the White House and the Senate Finance Committee cut with hospital and pharmaceutical companies to defray costs of a new health-care plan, stating that she thinks the industries could do more.

"When we're trying to cut costs, certainly we know that there are more costs to be cut in hospitals and pharmaceuticals. . . . So we'll be subjecting everything to some very harsh scrutiny as we see whether we can get more savings," Pelosi said in a late-afternoon interview, shortly after she left a marathon negotiating session with White House Chief of Staff Rahm Emanuel and conservative "Blue Dog" Democrats, who have put the brakes on the House version of the health-care reform bill. "As we look, there may be some more ways to get money out of pharmaceutical companies."

Pardon me if I don't see the lobbyists as the key to real reform. I think Nancy Pelosi's calculus might have more to do with it.

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Saying No To Tough On Crime, Yes To Sensible Prison Policy That Works

In between budget posts, I've lately been in a bit of a tiff with Chris Kelly, an Attorney General candidate and former Chief Privacy Officer at Facebook, over his stale, predictable fearmongering about potential early prison releases. There are a bunch of other estimable candidates in the Attorney General's race, one who did himself a ton of good yesterday by leading the fight against the offshore drilling proposal. So maybe I shouldn't take too much time on Kelly. But there's a short-term policy fight coming up next month to determine how to implement $1.2 billion in cuts to the corrections budget, and with some good activism and common sense we can stare down the Tough on Crime crowd and post a needed victory for sensible criminal justice policies. Therefore it's worth looking at Kelly's latest post:

The prison release plan is supposed to save $1.2 billion, but that’s just accounting trickery. In fact, a Federal Bureau of Justice Statistics study finds that nearly 70% of early-released inmates are rearrested within three years, 20% of them for violent crime. That will mean more than $3 billion in increased costs from crime while causing serious harm to hundreds of thousands of innocent victims.

I've spoken to police chiefs, law enforcement groups and civic associations throughout California about the issue, and they're deeply worried about the crime wave this scheme will unleash. It will be hard enough to make San Jose a safer community in tough economic times without the problems caused by early release.

Obviously, Kelly hasn't talked to the California Police Chiefs Association, which endorsed the plan as a smart step to begin to move away from the failed prison policies of the last thirty years. Foremost among these new ideas is the concept of targeting resources - instead of warehousing the terminally ill or blanket strict supervision on everyone released regardless of determining possibility of recidivism, we can put resources into programs that provide opportunity for prisoners to pay their debt to society and move on. This deal doesn't do all of that, but it does, for example, put ill and infirm prisoners under home detention or in a care facility, which doesn't impact public safety and saves money. It offers incentives for prisoners to complete rehabilitation plans. It reviews the cases of illegal immigrants in jails instead of just tossing them in the lap of the ICE to deal with, which would actually be the kind of misguided policy Kelly warns against. And most important, it includes an independent sentencing commission, outside of politics, which can look at our sentencing laws and make recommendations for the legislature to adopt on an up-or-down vote.

Using the buzzword of "early release" of "dangerous prisoners" is an old Tough on Crime ploy from way back, evoking memories of the Willie Horton ad in the 1988 Presidential race. It's irresponsible and not relevant to what is being discussed. We have the perfect Tough on Crime prison policy right now - and it's not working in every respect, to the extent that federal courts have stepped in to take control of it. Overcrowded prisons cannot fulfill their core mission of rehabilitating those jailed, and that's especially true where nonviolent offenders who need medical treatment for addiction and not incarceration are concerned. Brute force has not worked in making the state safer and has certainly caused our budget to skyrocket. And the truth is that more sensible policies can save money and create better prisons at the same time.

We need real reform in prison and parole policy, through concentrated resources, community corrections, and maintaining manageable prison capacity for those who really need to be there, and what will get decided in the legislature next month represents an important step. It can be easily derailed by fearmongering from the likes of Chris Kelly, trying to win an election on the backs of the poor and disenfranchised, on whom such brute-force policies typically rain down.

Over the next month I'll be looking far more closely at this issue, as it's the first big battle in regaining control of our state. And it's a winnable fight.

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Why Postponing Health Care Hurts Climate Change

Another factor to breaking for a three-week recess before finishing work on the health care bill is that it pushes everything back in the queue. There are serious efforts to arrive at legislation on financial regulation, as well as the Senate's version of a climate and energy bill already passed by the House, that now necessarily get moved aside. And in the meantime, energy and activist attention goes away from those priorities. It gives know-nothings like George Will more time to sow doubt and throw up meaningless statistics to make verifiably false claims about the condition of the planet. Even people who are on the side of doing something about climate change have contributed to this by raising unfounded fears about speculation in the cap and trade market and the dangers of Wall Street involvement (simply put, there are mechanisms to ban derivatives in Waxman-Markey, and the survival of the planet outranks the desire to deny profit to those trading carbon). It gives lobbyists more time to marshal their forces against anything but the status quo. And unlike with health care, where the progressive movement has focused for some time, on climate change the denialists are much further along in their activism, and delay actually will sap the fortitude of lawmakers.

The opposition to Waxman-Markey did a good job with phone calls to House members. They at least matched the calls that enviros and progressives delivered — though I’m told an analysis shows that most of their calls were out-of-state, while most of ours were in state. Still, that’s one reason we didn’t get more votes.

The climate destroyers are keeping up their attack on vulnerable House members — even if it means eating their own (see “Honey, I shrunk the GOP, Part 1: Conservatives vow to purge all members who support clean energy or science-based policy”).

The good news is that The Hill reports, “A coalition of labor, environmental and veterans groups is spending serious money to make sure Democrats who supported the cap-and-trade legislation have political cover.” Very important stuff, for sure — after all, the House is going to have to vote again on some House-Senate conference version of this bill in early 2010 assuming the Senate acts.

But we should be equaling, if not beating, calls to key senators right now. Heck, I’m told that Senators who aren’t even really swing votes are getting more than 100 calls a day opposing climate action. And those matter too, in terms of how even Senators on our side gauge public sentiment and how much they are willing to fight for the strongest possible bill.

That has a cumulative effect, even if members of the Senate want to pass good legislation. And hanging House members out to dry who voted for Waxman-Markey with nothing to show for it will damage them in 2010. Right now, the Senate is engaged in a zero-sum game, and at the end of the year, they might welcome having those three weeks back when they look at what they failed to produce.

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Primarying The Federal Reserve

Much in the way that lawmakers can get pulled from the center to the left when primaried by a member of their own party, the Federal Reserve, facing the prospect of a Consumer Financial Protection Agency that would take away some of its power, is shifting to a more consumer-friendly position on lending practices, including getting rid of the dreaded yield spread premiums that incentivize lenders to screw their customers.

The Federal Reserve on Thursday unveiled a proposal to curb abusive lending practices by reining in compensation for mortgage brokers and by helping borrowers better understand the terms of loans available to them.

The plan, which builds on a similar effort adopted by the Fed last year, comes just as the central bank is trying to fend off a legislative initiative that would strip its consumer-protection role by creating an agency to oversee consumer financial products.

"It certainly doesn't hurt the Fed that they came out with mortgage lending rules that were tougher than most of the industry was expecting," said Jaret Seiberg, a policy analyst at Washington Research Group, a unit of Concept Capital.

The toughest part of the Fed's plan deals with compensation for mortgage brokers, who act as middlemen between borrowers and lenders. These brokers can be rewarded with extra fees for placing borrowers in higher-rate loans.

The proposal attempts to end this practice by barring lenders from offering extra compensation based on the terms of the loan, including the rate. Consumer advocates have long argued that incentive-based pay contributed to the subprime mortgage meltdown.

"This plan has got the potential to eliminate one of the worst practices in the mortgage market," said Michael Calhoun, president of the Center for Responsible Lending. "The devil will be in the details. Some of the worst actors in the industry have proven to be adept at exploiting weaknesses in rules. The final rule has to be tightly and carefully written."

However these things get into law is fine with me. Whether the threat of the CFPA entices the Federal Reserve to do its job, or whether a CFPA gets enacted and does it itself, ending the practice of paying off mortgage brokers for screwing their customers is a good thing.

Of course, these are forward-looking proposals. And however solid they may be, they do not deal with the current problem of people struggling to stay in their homes and stave off foreclosures, which is only growing. The current mortgage relief efforts are simply not working. I'm glad that Sheldon Whitehouse is signaling another look at cram-down, the idea of allowing bankruptcy judges to modify loan terms with the broker. You have to give the borrower some opportunity to dictate terms, or as we have seen the bank will not modify the loans.

But there is another option, and that's own to rent. Dean Baker has pushed this proposal prominently, and it's starting to get support on Capitol Hill.

There is a simple solution that requires no taxpayer dollars, requires no new bureaucracy and can immediately help millions of people facing foreclosure. Congress can simply temporarily alter the rules on foreclosure to allow homeowners facing foreclosures the right to stay in their home for a substantial period of time (e.g. seven to 10 years) as renters paying the market rent.

The lender would take ownership of the house and would be free to resell it, but the lease would carry over for the duration of the period designated by Congress, or until the former homeowner decided to move. In this period, normal landlord-tenant laws would apply, with the exception that the lender would not have the option to evict the former homeowner without due cause.

This rule change would provide homeowners with a large degree of housing security. If they like their current home, their neighborhood, their kids' schools, they would have the option to remain there for a substantial period of time. Furthermore, by making foreclosure a less attractive option for lenders, a right to rent law should give lenders much more incentive to pursue mortgage modifications as an alternative to foreclosure.

This change should also be beneficial for neighborhoods that are plagued by large numbers of foreclosures. Keeping former homeowners in their homes will keep homes occupied, preventing the blight that often comes from vacant homes that are not maintained.

The banks will fight this, but the overall housing market will likely rise from diminishing the glut of supply. The banks would get off the hook for a lot of the upkeep of blighted properties, the cycle of foreclosures could get stopped, and they would obtain consistent revenue streams in the form of rental payments, while still holding the potential equity of selling the home. I really, really like this idea.

...of course, the Fed's nods toward consumer protection won't be enough for people like William Greider, who think it ought to be dismantled. I think it's hard to argue with Greider, considering he knows as much about the Fed as any human being alive.

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The Tanks Of Lackawanna

This is the second story in a week about how noble George W. Bush averted disaster. First he stuck to his principles about honesty and refused to pardon Scooter Libby (who he did already commute, incidentally, somehow that didn't make it into the paean of an article). Today we learn he was all that stood between us and tanks rolling down the streets:

Top Bush administration officials in 2002 debated testing the Constitution by sending American troops into the suburbs of Buffalo to arrest a group of men suspected of plotting with Al Qaeda, according to former administration officials.

Some of the advisers to President George W. Bush, including Vice President Dick Cheney, argued that a president had the power to use the military on domestic soil to sweep up the terrorism suspects, who came to be known as the Lackawanna Six, and declare them enemy combatants.

Mr. Bush ultimately decided against the proposal to use military force.

A decision to dispatch troops into the streets to make arrests has few precedents in American history, as both the Constitution and subsequent laws restrict the military from being used to conduct domestic raids and seize property.

The Fourth Amendment bans “unreasonable” searches and seizures without probable cause. And the Posse Comitatus Act of 1878 generally prohibits the military from acting in a law enforcement capacity.

It's not that I disagree that this was brought up as an option, it's the positioning of Bush as the defender of the Constitution that kind of galls me. Cheney was the Constitution's chief beta-tester ("testing the Constitution" is quite a turn of phrase, no?), and considering the wealth of other illegal actions, all justified like this one by at-the-ready memos from John Yoo, I just doubt that Bush really made these decisions, even if he felt like he did.

Frankly, all this dumping on Dick seems like part of the Bush Legacy Project to me. While Fourthbranch has been ready for his closeup throughout the Obama Administration - right up until the moment that Eric Holder started talking seriously about prosecutions that didn't involve him, that is, then he slithered back into the undisclosed location - Bush has kept a low profile in Dallas, gave a couple speeches, told stories about walking his dog and being jus' folks, and one by one all of these articles showing how he wasn't SO bad - he didn't want to use the military in American cities, after all! - keep popping up, using anonymous sources. It's a nice kickoff for the library.

Meanwhile, there is an important component to all of this, namely, the stated reason why the authority to use military force was sought:

Former officials said the 2002 debate arose partly from Justice Department concerns that there might not be enough evidence to arrest and successfully prosecute the suspects in Lackawanna. Mr. Cheney, the officials said, had argued that the administration would need a lower threshold of evidence to declare them enemy combatants and keep them in military custody.

Earlier that summer, the administration designated Jose Padilla an enemy combatant and sent him to a military brig in South Carolina. Mr. Padilla was arrested by civilian agencies on suspicion of plotting an attack using a radioactive bomb.

(This shows once again how the construction of Bush as a savior of the Constitution is false - he USED the powers granted by Yoo to designate Padilla an enemy combatant.)

So because of concerns that the evidence was weak, Cheney wanted to use "a lower threshold of evidence," and denote the Lackawanna Six enemy combatants to keep them outside the criminal justice system. We've gotten rid of the enemy combatants term, but not really the thinking of getting around the standards of evidence when dealing with terrorism suspects. While the report on detention policy and Guantanamo Bay has been delayed a number of months, in the preliminary report, we see the seeds of a three-tiered system of justice based on the amount of evidence gathered, altering the due process granted to ensure that the government can continue to confine anyone it captured relating to the so-called war on terror. As Glenn Greenwald writes today, in reaction to the NYT article:

All of this underscores why it is so important to vigorously oppose the efforts of the Obama administration (a) to continue many of the radical Bush/Cheney Terrorism programs and even to implement new ones (preventive detention, military commissions, extreme secrecy policies, warrantless surveillance, denial of habeas corpus) and (b) to endorse the core Orwellian premise that enables all of that (i.e., the "battlefield" is anywhere and everywhere; the battle against Terrorism is a "War" like the Civil War or World War II and justifies the same powers). By itself, the extreme injustice imposed by our Government on the individuals subjected to such tyrannical powers (i.e., those held in cages for years without charges or any prospect for release) should be sufficient to compel firm opposition. But the importance of these issues goes far beyond that. Even if the original intention is to use these powers in very limited circumstances and even for allegedly noble purposes ("only" for Guantanamo detainees who were tortured, "only" for people shipped to Bagram, "only" for the Most Dangerous Terrorists), it's extremely dangerous to implement systems and vest the President with powers that depart from, and violently betray, our core precepts of justice [...]

Those are the stakes when it comes to debates over Obama's detention, surveillance and secrecy policies. To endorse the idea that Terrorism justifies extreme presidential powers in these areas is to ensure that we permanently embrace a radical departure from our core principles of justice. It should come as no surprise that once John Yoo did what he was meant to do -- give his legal approval to a truly limitless presidency, one literally unconstrained even by the Bill of Rights, even as applied to American citizens on U.S. soil -- then Dick Cheney and David Addington sought to use those powers (in the Buffalo case) and Bush did use them (in the case of Jose Padilla). That's how extreme powers work: once implemented, they will be used, and used far beyond their original intent -- whether by the well-intentioned implementing President or a subsequent one with less benign motives. That's why it's so vital that such policies be opposed before they take root.

Those Presidents who fail to show respect and deference for the system of justice that has held over two centuries and more, even if they do not use the powers granted to them, set in motion a process to devolve that system. The precedents set by the Bush Administration, and potentially the Obama Administration, will have a lasting impact. So pardon me if I don't send a thank you note over to the 43rd President for not ordering an up-armored Humvee through a Buffalo suburb.

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Friday, July 24, 2009

Friday Random Ten

What a long day. Ready for the weekend:

All Falls Down - Kanye West feat. Syleena Johnson
The Move - The Beastie Boys (best to MCA)
All Apologies - Nirvana
Hotel Illness - The Black Crowes
Cut Your Hair - Pavement
Invisible Man - Nicole Willis & The Soul Investigators
It's Only Divine Right - The New Pornographers
Herculean - The Good, The Bad & The Queen
The Scientist - Coldplay (yes, I have a few Coldplay songs on here)
Idioteque - Radiohead

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CA-10: Endorsements, Endorsements, Endorsements

Lots happening in the CA-10 race: John Garamendi took the coveted Cal Labor Fed endorsement as well as the Napa-Solano Central Labor Council (Solano County is in the district). Mark DeSaulnier keeps picking up local endorsements. Joan Buchanan took the endorsement of EMILYs List, though I thought their principle was that early money is like yeast - aren't we five weeks out at this point? And Anthony Woods, in a major coup, scored the endorsement of the Human Rights Campaign and the Gay and Lesbian Victory Fund, which should give him lots of money and volunteer support. It was notable that DeSaulnier dropped endorsements of local LGBT leaders right after that announcement - obviously Woods has become a threat. You can see Anthony Woods tonight on Real Time With Bill Maher on HBO. And I have conducted interviews with Woods and DeSaulnier that I will roll out in the next week or so.

...a good rundown of the race, from Roll Call.

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The Unknown War With India

The President had a big victory this week when the Senate voted to strip funding for additional F-22 fighter jets, which the Pentagon and the Air Force didn't want, which haven't been flown once in Iraq or Afghanistan and which are apparently vulnerable to rain. It was a small step toward breaking the stranglehold of the military-industrial complex. The lobbyists were out in force to keep this alive, and a lot of lawmakers who have parts of the F-22 made in their district wanted to keep the gravy train going, but eventually, sanity prevailed. The military budget is increasing this year, and eventually we have to end a circumstance where we spend more on the military than every other country in the world combined, but if we couldn't cancel the F-22, we would not be able to cancel pretty much anything. So it was a good step toward lessening the power and influence of military contractors. Robert Farley has a great roundup of opinions.

Naturally, John Cornyn (Bugfuck Crazy-TX) doesn't agree. In fact, he thinks we have to use the F-22 to counter all sorts of threats. Including... India.

"It's important to our national security because we're not just fighting wars in Afghanistan and Iraq," Cornyn says. "We're fighting -- we have graver threats and greater threats than that: From a rising India, with increased exercise of their military power; Russia; Iran, that's threatening to build a nuclear weapon; with North Korea, shooting intercontinental ballistic missiles, capable of hitting American soil."

I wasn't aware that we were at war with India. In fact, I don't get over there much, but I'm pretty sure we're an ally. In fact, Hillary Clinton just spent four days there this week. We just completed a civilian nuclear power agreement with them last year.

I guess being Republican means "never having to say you're sorry to an allied country for calling them an enemy." Remember when John McCain thought we were at war with Spain?

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Honduras Update

The deposed President was sitting on the border between Honduras and Nicaragua, and briefly stepped inside Honduran territory for reasons that are inscrutable. He then walked back over the line, reporters in tow.

Meanwhile, the current Honduran government has a curfew set in the border areas.

As the talks to settle this dispute have collapsed, I don't see a possible endgame, though I assume more sideshow activity like "I'm in Honduras, now I'm not" will probably be in order.

And I think we can all agree that, while it's hard to find winners in this situation, we can definitely pinpoint one loser - Lanny Davis.

"My clients represent the CEAL, the [Honduras Chapter of] Business Council of Latin America," Davis said when reached at his office last Thursday. "I do not represent the government and do not talk to President [Roberto] Micheletti. My main contacts are Camilo Atala and Jorge Canahuati. I'm proud to represent businessmen who are committed to the rule of law." Atala, Canahuati, and other families that own the corporate interests represented by Davis and the CEAL are at the top of an economic pyramid in which 62 percent of the population lives in poverty, according to the World Bank.

For many Hondurans and Honduras watchers, the confirmation that Davis is working with powerful, old Honduran families like the Atalas and Canahuatis is telling: To them, it proves that Davis serves the powerful business interests that ran, repressed, and ruined Honduras during the decades prior to the leftward turn of the Zelaya presidency.

"No coup just happens because some politicians and military men decide one day to simply take over," White says upon hearing for whom Davis is working. "Coups happen because very wealthy people want them and help to make them happen, people who are used to seeing the country as a money machine and suddenly see social legislation on behalf of the poor as a threat to their interests. The average wage of a worker in free trade zones is 77 cents per hour."

"The tragedy," adds White, "is that the Canahuatis and the Atalas and the other big businesspeople don't understand that it's in their best interest to help to do things like help people make a decent living, reduce unemployment, and raise the minimum wage."

What do you get when you cross a wealthy businessman, the might of a military, and a Latin American coup? Lanny Davis for ten grand or so a month.

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Always Darkest Sausage-Making Before The Dawn

Ezra gives the 10,000-foot view of today's health care crackup in the House, and Henry Waxman's dicey choice on how to resolve it:

The central issue here is simple enough: The Blue Dogs want Waxman to make concessions he doesn't want to make. The sticking points, according to sources close to the process, are the public plan -- Blue Dogs still want a trigger option -- and the administration's proposal, which the Blue Dogs support, to create an independent commission able to set Medicare payment rates and make reforms. Waxman and others worry that a Republican administration and Congress could use this panel to undermine the Medicare program.

You can take Waxman's statements one of a couple ways. His willingness to bring the bill directly to the floor undermines the bargaining power of the Blue Dogs: It means they don't have veto power over the bill. This could, in other words, be a negotiating tactic on Waxman's part to soften the Blue Dogs' position. But if that doesn't work, it could also mean exactly what it says: That he's going to push the bill straight to the floor.

That would ensure some bad headlines, and an angry Blue Dog caucus. But versions of this bill have passed two other committees. Energy and Commerce isn't strictly necessary. Waxman's threat to bring the bill to the floor means that Pelosi and Waxman think they have the votes whether or not Energy and Commerce approves the legislation. And that may not be such a bad outcome, either for the Democrats or the Blue Dogs.

But Blue Dogs might balk, because they don't want to walk the plank on a bill if the Senate Finance Committee won't walk it either. We're basically seeing a game of chicken, between Waxman and the Blue Dogs as well as between the House and the Senate. Nobody wants to take the tough vote first. But somebody has to, in order to get the ball rolling.

Brian Beutler discerns tension and chaos on the Hill, but I've heard different. I heard Waxman and Mike Ross have stated that talks are ongoing and that a markup could be held as early as Tuesday. And that Steny Hoyer said publicly at a press conference that votes could happen next week. So we don't really know what's going on quite yet. It's hard not to despair just as a reflex, but I wouldn't just yet.

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Budget Hell Pretty Much Over, Reality Hell Begins

So the Assembly is wrapping up their budget session, and it turns out that the Assembly came up $1.1 billion dollars short of the Senate's solutions. Oil drilling failed, and the local government raid on HUTA (gas taxes) failed as well.

So where does that leave us? These bills will go to the governor, and since there isn't concurrence, it will be roughly a $23 billion solution rather than $24 billion. But, the Governor has a line-item veto. He can make various cuts with his blue pencil. But $1.1 billion? Who knows. That seems like a tall order.

Considering what Schwarzenegger did the last time a partial solution was handed to him, I guess there's an outside shot that he'll just say no and open a new extraordinary session. But he'll probably just line-item some, and maybe make up the difference by eating into what is now a $900 million dollar budget reserve.

Is everybody ready to be back here in October?

...Let me clarify. The Governor can make line-item cuts but he doesn't necessarily have to, because this is a budget revision. He can also shift around the size of the reserve. In the end, he doesn't actually have to be in balance for a revision; that's a Constitutional need at the beginning of the process, as I understand it, not now. Clearly from the Governor's remarks, he's not going to veto the whole thing, so this is the "solution," for now. There also may be Constitutional problems with some of the stuff passed.

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Woke Up This Morning...

I think Tony Soprano would blush at the widespread corruption ring busted up in New Jersey yesterday, involving mayors, cabinet officials, and a box of Kellogg's Apple Jacks with $97,000 in it:

Federal agents swept across New Jersey and New York on Thursday, charging 44 people -- including mayors, rabbis and even one alleged trafficker in human kidneys -- in a decadelong investigation into public corruption and international money laundering.

The key to the investigation: a real-estate developer who became an informant after being arrested on bank-fraud charges in 2006, according to a person familiar with the case. The developer, Solomon Dwek, wore a wire for the Federal Bureau of Investigation while offering to bribe New Jersey mayors and other public officials, that person said.

While the state has a long history of dirty politics -- in Newark alone, three ex-mayors have been convicted of crimes unrelated to the latest sweep -- the scale of the allegations shocked veterans of New Jersey's political crises.

"This is not only a black eye, but this fans more cynicism," said Gene Grabowski, a crisis manager who has represented New Jersey clients in graft probes. "It validates this idea that New Jersey is a setting for 'The Sopranos.'"

Court documents read like a pulp crime novel. At one point, Mr. Dwek (described as a "cooperating witness" in criminal complaints) is quoted saying to an alleged money-launderer: "I have at least $100,000 a month coming from money I 'schnookied' from banks for bad loans."

Another time, Mr. Dwek gave one of the alleged co-conspirators a box of Apple Jacks cereal stuffed with $97,000 cash, the documents say.

The bad, bad news here for national Democrats is that I think this delivers a fatal blow to the already-flagging Jon Corzine re-election campaign. Chris Christie was a US Attorney who can credibly claim to have put corrupt public officials in jail, and he did so in a TV ad up today. Now, it turns out that a lot of his cases were politically motivated (he was a Bush-appointed US Attorney, after all) and he has lots of serious problems, and New Jersey is a Democratic state. But he's led comfortably throughout this, and he'll probably strike the reformist law-and-order pose all the way until November. What's more, one of the people caught up in this probe from yesterday was a member of Corzine's Administration.

If I were the national party or the Democratic Governor's Association, I'd put my money in the short-term into the Virginia governor's race. I think New Jersey is a long shot for the time being.

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CNN Could End The Birther Story Today

CNN is desperately trying to get themselves off the hook for Lou Dobbs' warm embrace of the Birthers. The President of the network declared the controversy "dead" today.

The website TVNewser reported today that Klein sent an e-mail to staffers of “Lou Dobbs Tonight” just as the program went to air, informing them that CNN researchers had determined that Hawaiian officials discarded all paper documents in 2001. A long-form birth certificate with details about the doctor who delivered Obama no longer exists, they reported. The shorter Certificate of Live Birth noting Obama’s birth on Aug. 4, 1961, that has been made public is the official record.

“It seems to definitively answer the question,” Klein wrote, according to TVNewser. “Since the show's mission is for Lou to be the explainer and enlightener, he should be sure to cite this during your segment tonite. And then it seems this story is dead -- because anyone who still is not convinced doesn't really have a legitimate beef.”

If Klein really thinks that Dobbs will just drop everything now, he's kookier than Dobbs himself. And he also shouldn't believe that this is no longer a problem. The Southern Poverty Law Center has called for Dobbs' removal. That would be an actual way to end all the speculation on CNN about this.

This is not the first time Mr. Dobbs has pushed racist conspiracy theories or defamatory falsehoods about immigrants. We wrote you in 2007 to bring to your attention his utterly false claim that 7,000 new cases of leprosy had appeared in the United States in a recent three-year period, due at least in part to immigrants. (The real number, according to official statistics, was about 400. Mr. Dobbs took his spurious information from the late right-wing extremist, Madeleine Cosman.) In addition, Mr. Dobbs has reported as fact the so-called Aztlan conspiracy, which claims that undocumented Mexican immigrants are part of a plot to "reconquer" the American Southwest. He has suggested there is something to a related conspiracy theory that claims the governments of Mexico, the United States and Canada are secretly planning to merge into the "North American Union." He has falsely claimed that "illegal aliens" fill one third of American prison and jail cells. And Mr. Dobbs has routinely disparaged, on CNN's air, those who have had the integrity to point out the falsity of these and similar claims.

Respectable news organizations should not employ reporters willing to peddle racist conspiracy theories and false propaganda. It's time for CNN to remove Mr. Dobbs from the airwaves.

That would surely add to CNN's credibility., forget whatever good things I said about Jon Klein.

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Obama Holds His Ground

The President just interrupted a press briefing with Robert Gibbs to further discuss the controversy over Henry Louis Gates. And while he acknowledged that his language could have been different, he pointedly did not apologize or submit that he said anything wrong.

Obama said he spoke directly with Crowley today and has extended an invitation to meet with the officer.

However, the president did not back away from his other remarks on racial profiling in America. “The fact that it has garnered so much attention, I think, is testimony to the fact that these are issues that are still very sensitive here in America,” he said.

“I continue to believe that there was an overreaction in pulling Professor Gates out of his home to the station,” he said. “I also continue to believe, based on what I heard, that Professor Gates probably overreacted as well.”

“My sense is you’ve got two good people in a circumstance in which neither of them were able to resolve the incident in the way it should have been, or the way they would have liked it to be resolved,” the president said.

Obama further rejected the criticism that as president he should not have weighed in at all. “That I disagree with,” he said. “Race is still a troubling aspect of our society. Whether I were a black or a white, I think me commenting on this and hopefully contributing to constructive as opposed to negative understanding about the issue is part of my portfolio.”

The president expressed frustration that the controversy has distracted from the conversation he’d rather be having. “I don’t know if you’ve noticed, but nobody’s been paying much attention to health care,” he quipped.

Greg Sargent has more. Good for him. The press can attack him all they want, but he is standing up on a legitimate policy issue - racial profiling and police misconduct - which will resonate for a hell of a lot of people in this country. The media might go nuts, but Obama was right to say what he said, and he's right to defend it.

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Still Not Over - Assembly Stalemated

The Assembly has gone into a deep cocoon, only occasionally popping up to finish a vote that has been placed on hold. The most recent one was SB12, which set cuts for general government. That's not necessarily in the land of controversial votes - the local government raids, the offshore drilling proposal and the return payment of Prop. 98 maintenance of effort funds in future years are the major stumbling blocks. But SB12 couldn't get the 54 votes needed for passage, stalling out at 51. Now, it's possible that this was just a delay tactic while negotiations and arm-twisting continue over the other issues. But the longer this plays out, the more opportunity for a collapse.

The Senate is in adjournment. They are gone until August. They jammed the Assembly and now the Assembly has to find a way out of the mess. If you've resigned yourself to the fact that this is over, well, I think we might have a long way to go. Remember that the Assembly has one less person in it now than it did in February - Curren Price moved up to the Senate. That means additional votes are needed, most likely from Republicans, for these measures.

I would be slightly surprised if these remaining measures didn't pass. But the going is very slow, and there's still time to weigh in and whip your Assemblymembers, particularly on the contentious issues.

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The End Around The Blue Dogs

One of my co-guests on NPR today was Henry Cuellar, a Blue Dog. And 30 minutes goes fast with three guests, so I didn't get to confront him and his arguments as much as I wanted. For instance, McAllen, TX, is in his district, and that was the subject of the widely touted Atul Gawande piece in The New Yorker about disparities in health care delivery and effectiveness. But Cuellar pretty much harped on costs, costs, costs as an impediment to getting something done. I countered that cost control and expanding access, in many cases, are complementary. This makes the Blue Dog argument incoherent. They want to cut costs, but they are reluctant to enact the reforms that actually would do it. Not to mention the fact that they talk of fiscal responsibility while trying to carve out funding for rural health care, for example, which is the exact opposite of cost-cutting. And Steven Pearlstein picks up on this today.

The challenge for the Blue Dogs is that they want an America where everyone has insurance but are reluctant to force workers to buy it or employers to help pay for it.

They understand that achieving universal coverage will require subsidies for low-income workers and small businesses, but they insist that none of those changes add to the federal deficit or raise anyone's taxes.

They want to introduce more competition into the private insurance market, but not if it comes from a government-run insurance plan.

They complain constantly about the need to rein in runaway Medicare costs while at the same time demanding higher Medicare reimbursement rates for doctors and hospitals in rural areas.

You see what I mean about mushy centrism?

Yes. Yes I do.

The truth is that the Blue Dogs are slaves to entrenched power, serving the interests of powerful lobbies rather than the middle-income voters in their districts. Cutting subsidies to 300% of poverty level from 400% would make health care less affordable to working people - and it's only being considered in the House because Blue Dogs want to protect those making half a million a year from a surtax.

Henry Waxman refuses to let the Blue Dogs make chicken salad out of the House plan. He's talking about bypassing his committee entirely and bringing the bill already voted out of two other committees to the floor.

Chairman Henry Waxman (D-Calif.) says there is "no alternative" but to have healthcare legislation bypass his Energy and Commerce Committee if Blue Dog Democrats don't accept a deal worked out Friday.

Waxman is now playing a game of legislative chicken with the Blue Dogs. He's hoping the inclusion of a study on Medicare reimbursement rates in the healthcare overhaul will be enough to placate the centrist Democrats, who say the government program short-changes hospitals and physicians in their rural districts.

If that’s not, the seven Blue Dogs could join with the committee's Republicans to "eviscerate" healthcare reform, and that’s something Waxman will not tolerate.

"I won't allow them to hand over control of our committee to Republicans," Waxman told reporters.

Just like that, this morning, word leaked that Democrats in the House have agreed to include President Obama's "MedPAC on steroids" proposal to assemble a team of health care policy experts to make annual recommendations about Medicare, including reimbursement rates and delivery changes, that would face an up or down vote in Congress. This deal was the result of late night negotiations between Rahm Emanuel and the Blue Dogs. But they do not seem to have fully satisfied them.

At some point, I think you do have to pull the trigger. Matt Yglesias makes the moral case, that good legislation matters more than good process.

Something a lot of progressive legislative leaders seem to have forgotten until this Congress actually got under way is that historically congressional procedure is a challenge to be surmounted when you want big change to happen. It’s not actually a fixed feature of the landscape that people “have to” accommodate themselves to. For years you couldn’t get a decent Civil Rights bill because segregationists controlled the Judiciary Committee that had jurisdiction. This problem was “solved” by just deciding to bypass the Judiciary Committee. When you decide you want to get things done, you find a way to get them done. Even the allegedly sacrosanct filibuster rule has been changed repeatedly over the years. The law is the law and the constitution is the constitution, but the rules of congressional procedure are not law. They’re internally made rules, they’re subject to change, and the criteria for a good set of rules is that you want rules that produce good legislation and good governance.

If the internal rules are in place you should work to change them if they obstruct a change both the majority of Americans and the majority of the Congress clearly want. the way, I agree with Pearlstein that Medicare might not be the best program to use for reforming the system:

The problem with using Medicare to serve as the leading edge of reform, however, is that it relies on a patient population, the elderly, that is least able and willing to embrace change. A better vehicle would be the new government-run insurance option that has become a political must-have for House leaders and President Obama. In return for dropping their opposition to such a "public option," the Blue Dogs could have insisted that it not be structured as a fee-for-service plan along the lines of Medicare but rather offer services through a network of high-quality, lower-cost hospitals and clinics that use teams of salaried doctors to provide coordinated care, along the lines of the Mayo and Cleveland clinics that Obama is always touting. In a competitive market, the success of such a government-run plan would force other insurers to follow suit. the Blue Dogs claim that talks broke down today to resolve differences with Waxman, and I have to say he appears to be full of it. He says that Waxman took things off the table that, an hour before, Waxman was hailing in public as part of a breakthrough agreement? Doesn't pass the smell test. Someone's lying.

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Bad Time For A Recess

I was on NPR's Tell Me More this morning (sorry for the late word!), and you can listen to it here. In it I talked about the insanity of Congress taking a three-week break in August when the reform bills are reaching a critical point. While Congress goes home for three weeks, 145,000 people will lose their health care, and with such a sense of urgency, it makes no sense for Congress to let up on the gas, especially when we've debated this issue for 60 years or more. Ezra Klein shares my concern:

The August deadline, I fear, is actually getting a bit confused. The point isn't that the bill needs to be done by Aug. 6, and no other date will do. It's not about an arbitrary point on the calender. If Aug. 16 were no different than Aug. 6, it wouldn't matter which date saw the completion of the process. But Aug. 16 is not the same as Aug. 6. Aug. 16 is part of Congress's month-long vacation.

Right now, whatever its dysfunctions, there's a certain rhythm to health-care reform on the Hill. The committees have been working on this for months. There's back-and-forth with the Congressional Budget Office, there are ad hoc coalitions of interested senators, there are negotiations and amendments and draft proposals and discussions. It's not pretty stuff, as each day's headlines show. But it's the stuff of progress. To be so close to a finished product and a mark-up and a vote and then, for no actual reason, abruptly stop, is insane. It means a cessation to discussions, negotiations, relationships, hearings, to the work of legislating. It means that the hard work of creating this policy will stop for a month and give way to the politics of fighting over it. That's not healthy. "Ideas can melt in the sun," Nancy Pelosi said when I interviewed her Wednesday, "especially in August."

That's important. It's not that I believe progressives fear losing a "battle of ideas" with conservatives in members' districts over health care - I actually think the progressive activist class will get out to town hall meetings and agitate. Progressives are winning the ad wars, and great ads like this will continue. And Organizing for America was practically invented for this kind of outcome. The difference is that Chris Cillizza will for a month write about the big political brouhaha over health care instead of the Congress coming to a negotiated agreement. You'll see tea partiers in the streets and basically political theater.

The President says that the important thing is now to keep working and he does recognize the importance of not wasting one day of delay. And Sen. Reid does expect the Senate Finance Committee to finish their bill by August 7. But this is a mistake, for political reasons in addition to stalling the policy.

...One of my colleagues on the radio today, Blue Dog Henry Cuellar, objected to my characterization that the recess is a "vacation," saying it's an opportunity to listen to his constituents. You can also do that with, I don't know, a phone. But this means that he'll certainly be listening to gauge where to go with his vote. So Kevin Drum is right - if Obama's email list ever needed to be put to use, it's now. They should flood their Representatives' offices.

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Not Stupid, Just Secure In Their System

A few days ago, AmericaBlog asked if Goldman Sachs was tone deaf, politically stupid or foolish to boast about high bonuses during a recession. I think the right answer was "they know they can get away with it." Indeed, those record profits from the banks were a feature, not a bug. The government decided to indirectly bail Goldman and other banks out by allowing them to make bushels of money, much of it handed over by the Feds, and essentially recapitalize themselves. It hasn't fully worked, and much of it is illusory, but it's worked enough to give profits for now to a lot of banks, and as a result, compensation shoots up. That's just a byproduct of the decision on how to help the banks out of their mess. That decision itself gets clearer when you look at the revolving door between D.C. and Wall Street, which apparently doesn't stop even if the individual in question helped to fund the Sudan genocide.

As for the political pitfalls of announcing record profits right at the beginning of talks over financial regulatory reform, that doesn't appear to be a great obstacle, either.

Intense lobbying pressure from Wall Street has slowed the progress of a major piece of financial regulatory reform legislation. Financial Services Committee chairman Barney Frank (D-Mass.) informed committee members Monday night that a vote on the creation of the Consumer Financial Product Safety Commission will be pushed back until September.

"We wanted to give consumer groups and their allies time to work with their members, organize and get their message out," said committee spokeswoman Elizabeth Esfahani. "So far in this debate, we've only heard from one side, the banking lobbyists, so we want to give both sides time to be heard."

The setback is a wake-up call for Democrats, said Rep. Brad Miller (D-N.C.), an original sponsor of the measure.

"Now some of those who thought with a conciliatory approach we might get agreement, I think they now know that it's going to be a battle," said Miller.

Further undermining the efforts to create a Consumer Financial Protection Agency, beyond the bank lobbyists, is the chairman of the Federal Reserve Ben Bernanke, who thinks that the Fed can manage that on their own. Of course, the Fed is a quasi-governmental partnership with... those same big banks whose lobbyists want to tear the heart out of the CFPA. I'm not hopeful that the Federal Reserve would somehow become this uber-regulator over those who partially own them.

Brad Miller is sure to not give up on this, nor will Elizabeth Warren, who can be credited with the idea. Her article on the myths of a CFPA is must-reading. But clearly, they have a big set of hurdles, not the least of which is the perspective that the bankers still "own the place" when it comes to cracking down on them in any meaningful way.

Sure, Goldman won't be able to get everything it wants. After haggling over the purchase of government warrants, they paid them off at a solid price for taxpayers. But that's a small price to pay for keeping the regulatory efforts in their direction.

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The Facts Of The Gates Case

The Henry Louis Gates situation is mainly a distraction. But there's also a serious policy component. Policemen should not be allowed to arrest someone for being an asshole in their own home. If that was the case, right-wing bloggers would all be doing 10-20. It appears clear, and I guess there may be audio tape to this effect, that the cop came to Gates' house, figured out that he was not a burglar, words were exchanged, and then the cop arrested him for disorderly conduct. That's really over the line of what cops should be allowed to do, regardless of the motivations, racial or otherwise.

The crime of disorderly conduct, beloved by cops who get into arguments with citizens, requires that the public be involved. Here's the relevant law from the Massachusetts Appeals Court, with citations and quotations omitted:

The statute authorizing prosecutions for disorderly conduct, G.L. c. 272, § 53, has been saved from constitutional infirmity by incorporating the definition of "disorderly" contained in § 250.2(1)(a) and (c) of the Model Penal Code. The resulting definition of "disorderly" includes only those individuals who, "with purpose to cause public inconvenience, annoyance or alarm, or recklessly creating a risk thereof ... (a) engage in fighting or threatening, or in violent or tumultuous behavior; or ... (c) create a hazardous or physically offensive condition by any act which serves no legitimate purpose of the actor.' "Public" is defined as affecting or likely to affect persons in a place to which the public or a substantial group has access.

The lesson most cops understand (apart from the importance of using the word "tumultuous," which features prominently in Crowley's report) is that a person cannot violate 272/53 by yelling in his own home.

Read Crowley's report and stop on page two when he admits seeing Gates's Harvard photo ID. I don't care what Gates had said to him up until then, Crowley was obligated to leave. He had identified Gates. Any further investigation of Gates' right to be present in the house could have been done elsewhere. His decision to call HUPD seems disproportionate, but we could give him points for thoroughness if he had made that call from his car while keeping an eye on the house. Had a citizen refused to leave Gates' home after being told to, the cops could have made an arrest for trespass.

But for the sake of education, let's watch while Crowley makes it worse. Read on. He's staying put in Gates' home, having been asked to leave, and Gates is demanding his identification. What does Crowley do? He suggests that if Gates wants his name and badge number, he'll have to come outside to get it. What? Crowley may be forgiven for the initial approach and questioning, but surely he should understand that a citizen will be miffed at being questioned about his right to be in his own home. Perhaps Crowley could commit the following sentences to memory: "I'm sorry for disturbing you," and "I'm glad you're all right."

Spoiling for a fight, Crowley refuses to repeat his name and badge number. Most of us would hand over a business card or write the information on a scrap of paper. No, Crowley is upset and he's mad at Gates. He's been accused of racism. Nobody likes that, but if a cop can't take an insult without retaliating, he's in the wrong job. When a person is given a gun and a badge, we better make sure he's got a firm grasp on his temper. If Crowley had called Gates a name, I'd be disappointed in him, but Crowley did something much worse. He set Gates up for a criminal charge to punish Gates for his own embarrassment.

By telling Gates to come outside, Crowley establishes that he has lost all semblance of professionalism. It has now become personal and he wants to create a violation of 272/53. He gets Gates out onto the porch because a crowd has gathered providing onlookers who could experience alarm. Note his careful recitation (tumultuous behavior outside the residence in view of the public). And please do not overlook Crowley's final act of provocation. He tells an angry citizen to calm down while producing handcuffs. The only plausible question for the chief to ask about that little detail is: "Are you stupid, or do you think I'm stupid?" Crowley produced those handcuffs to provoke Gates and then arrested him. The decision to arrest is telling. If Crowley believed the charge was valid, he could have issued a summons. An arrest under these circumstances shows his true intent: to humiliate Gates.

The cop baited the guy into leaving the house so he could arrest him for making a cop feel bad.

I appreciate the work of law enforcement. But regardless of race, too many cops have the belief that if they get insulted, they have the right to turn that into an arresting offense. That's not the law whatsoever, nor should it be. It creates a chilling effect among the public not to call out bad behavior in law enforcement or raise your voice in any way. I know we're all supposed to believe that cops are saintly, but I live in LA. Police misconduct happens all the time, and we should be vigilant when it does.

Instead, the media takes the soccer ball and chases it into the corner, without any semblance of factual records or perspective. It becomes an emotional argument instead of a factual record of misconduct. We pay cops with tax money. We should not risk arrest when arguing with them.

Josh Marshall hit this from a different angle last night.

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Shiny Object

At a time where all the policy focus is on reforming health care for the first time in a generation, white reporters everywhere are obsessed with the story of a black man arrested in his own home for daring to be angry about it, and how terrible it was for the President to speak on behalf of those in such a circumstance. Similarly, while health care and urgent domestic issues demand attention, the wingnuts want to talk about Obama's birth certificate and some grand conspiracy to plant certificates of live birth in Hawaii and articles in the local paper 47 years ago in the hopes that later on a biracial kid growing up on the islands in the 1960s would fulfill the obvious goal of becoming President. G. Gordon Liddy was absurd and doddering last night on Hardball. He lied about a deposition from Obama's grandmother that the President was born in Kenya, a result of mistranslation. But you know what he did? He ate up five and a half minutes on prime time cable TV. I know that Chris Matthews was basically beating up on Liddy and the Birther movement in general. But that old saying about how there's no such thing as bad publicity? It's especially true when time is finite.

Bill Scher sees a linkage between those willing to believe the Birther nonsense and those willing to believe in the myth of socialized medicine in the Obama health care plan.

The Birther movement has received renewed attention in recent days, after video of a Birther-dominated congressional town hall surfaced, and CNN's Lou Dobbs attempted to legitimize the conspiracy theory.

Less noticed is the propensity of Birthers to also believe the other conservative conspiracy theory: President Obama's health care plan is a socialist takeover of our medical system.

The long-standing high-traffic conservative website World Net Daily regularly leads its front page with the latest Birther news, but that is directly followed by the latest "socialized medicine" news. (Well actually, sandwiched between the two sets of conspiracies are the all important "Special Offers!" -- such as "Turn $200 investment into $1 million. Sound impossible?")

Beneath its Birther fever swamp, World Net Daily offers the "Breaking News" that Congress plans mandatory "counseling" for seniors that will "attempt to convince seniors to die," (the latest smear job from the discredited Betsy McCaughey) and the "Exclusive" that congressional members have exempted themselves from the public plan option (it's so "exclusive" to WND because the opposite is true.)

And at that infamous town hall for (non-Birther) Rep. Michael Castle, the loud Birther crowd also gave cheers and applause to an audience member who ranted: "if we let the government bring in socialized medicine, it will destroy this thing faster than the twin towers came down.”

I just think it's about distraction. The Birther movement exists to rally a certain group of people and get the media chasing after them. It's a sideshow, and it makes for good TV. In the 1990s it was the murder of Vince Foster and a whole other lot of insane conspiracy theories. It made the more plausible but just as wrong conspiracy theories easier for the media to swallow. It's Overton Window stuff to the extreme. But in the short term, it just kicks the debate away from the focus sought by the White House and the majority of the country. The same with the Gates comments.

The media fail to see their role in all of this. They are not bystanders. They make editorial decisions to follow one story over another. They can devote resources wherever they choose. They could convene panels of health care policy experts and go over the issue that affects everyone's life in a visceral way. Or they could focus on the sideshow. They choose the latter, and that choice is not "driven by events," or whatever they would say to cover themselves.

...Howard Fineman, of all people, saying the same thing on Countdown. Of course, then he'll go on another MSNBC show and participate in the scrum.

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The Curious Case Of Esfandiar Rahim Mashaei

The civil unrest in Iran has sparked some very strange internal power struggles. While the main rift between reformers and hardliners continue, with the reformist former President Mohammad Khatami seeking a referendum on the legitimacy of the government (good idea, the way to deal with a stolen election is ANOTHER election), a Vice Presidential appointment by hardliner Mahmoud Ahmadinejad has caused yet another split:

Iran's president, under attack by reformists after his disputed election victory last month, on Tuesday openly defied his most powerful backer, refusing an order by supreme leader Ayatollah Ali Khamenei to dump a newly chosen vice president who is despised by hard-liners for insisting last year that Iranians had no quarrel with the Israeli people.

President Mahmoud Ahmadinejad finds himself under increasing pressure from Iranian hard-liners who appear eager to reap political rewards after leading a weeks-long crackdown on supporters of opposition figure Mir-Hossein Mousavi, who say vote fraud was responsible for Ahmadinejad's victory [...]

Ahmadinejad surprised many observers by defending the vice president, Esfandiar Rahim Mashaei, an in-law, in the face of a torrent of criticism from his hard-line allies.

News agencies confirmed Tuesday that Khamenei sent a letter to Ahmadinejad on Monday asking for the removal of Mashaei.

"The president should announce the dismissal, or acceptance of the resignation of Rahim Mashaei right away," said Mohammad Hasan Abu- torabi, the deputy speaker of parliament, according to the semiofficial Iranian Students News Agency.

But Ahmadinejad insisted on state television that Mashaei "will continue his job," adding, "he is very loyal to the Islamic Revolution and a servant of people."

Kevin Drum thinks this is a sign of Khamenei's weakened power, but Juan Cole thinks something's up:

There is something fishy about this story, since if Khamenei wanted Ahmadinejad to do something, why would he do it in a secret letter that only two MPs have seen? [...]

One possibility is that Khamenei is displeased but does not want to weaken Ahmadinejad by publicly overruling him, at this juncture when things are already unstable. That would make sense of his sending a private letter. Maybe it was circulated to other hard liners only when Ahmadinejad declined to heed it?

In the Iranian constitution, Supreme Leader Khamenei can overrule Ahmadinejad on virtually anything, and can dismiss him at will. So if Khamenei really wants Rahim-Masha'i gone, he'll be history.

I could also see this being more about Ahmadinejad trying to gain favor on the moderate side by appointing someone more in line with their less strident perspective. Which would be a sign that the protests are taking their toll.

Hardliners have continued their assault on Ahmadinejad today. This has become a case of palace intrigue rather than a popular movement. But the popular movement is the catalyst. Ahmadinejad knows he can defy the Supreme Leader because his legitimacy has waned.

...Ahmadinejad caved, firing Mashaei. Should be interesting to see the fallout.

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70 Cents An Hour

As the final phase from a bill passed back in 2007, today the federal minimum wage rises to $7.25 an hour from $6.55 for workers across the country. This brings the federal minimum wage, adjusted for inflation, back to where it was in the 1990s. It's hard to determine how many minimum-wage employees there are out there, but the best guess is that five million people get a raise today. Here's one of them.

While those workers include thousands of financially secure students still living with Mom and Dad, they also include thousands of the most impoverished and vulnerable members of the workforce – those who sink further into debt each month as ordinary expenses outweigh their meager paychecks.

April Greer, 36, is one of them.

Her troubles began in December, when her husband was sent to prison for a parole violation, leaving her the sole provider for her three teenage children who live with her.

In January, she was fired from her job at a cellular provider. She said she was late for work because her sister-in-law commandeered her car.

She spent early spring trawling East Dallas for a new job, but, like millions of Americans, she found none.

In early May, Greer's electricity provider finally turned out the lights. A few days later, her landlord changed the locks. She and her children crowded into the South Dallas bungalow of her husband's parents.

She finally caught a break two months ago, when a nonprofit agency helped her land a part-time, minimum-wage job at T.J. Maxx, taking home about $800 a month.

Two weeks ago, after she started having dizzy spells at work, she collapsed and spent two days in the hospital.

Doctors aren't sure what's wrong with her. Maybe diabetes. Maybe her heart. Maybe just stress.

Greer knows she can't afford $434 a month for the medication her doctor says she needs. She can barely afford the $100 a week she's been paying her in-laws to cover their ballooning utility bills.

She wants to find a second job, but doesn't know if her body can take it.

"Since I'm the only one right now for my kids, I have to take care of my health," she said.

Those with the lowest incomes are often those who have the most health issues. That comes from stress, overwork, the lack of a nutritious diet, living in low-income environments where more pollution exists, and a variety of other factors. In this most cruel of American landscapes, the poor and the sick often are the same person.

But what we'll hear today is how adding 70 cents an hour will bankrupt businesses. In actuality it will act as a mini-stimulus, giving the poor about $28 more a week for necessities that will almost certainly get spent and cycled into the economy.

What we certainly won't hear about is how the struggle of these minimum-wage workers fits into the health care debate. Many are probably already on Medicaid, but a provision in the bill would limit out-of-pocket costs for everyone, and expanding access would help make sure nobody who needs health coverage slips through the cracks. The air-blown press corps may have thought Obama's press conference was bor-ring, but the issues discussed directly affect the lives of people like April Greer. It would be nice if they could take up the debate with some inkling of concern for her, rather than acting like theater critics critiquing how folsky or animated the President was during his press conference.

Republicans and fiscal scolds say we just cannot afford to help someone like April. She ought to just get a job with the government. But Krugman says something important today - contrary to conservative belief, access and cost control are complementary.

Why does meaningful action on medical costs go along with compassion? One answer is that compassion means not closing your eyes to the human consequences of rising costs. When health insurance premiums doubled during the Bush years, our health care system “controlled costs” by dropping coverage for many workers — but as far as the Bush administration was concerned, that wasn’t a problem. If you believe in universal coverage, on the other hand, it is a problem, and demands a solution.

Beyond that, I’d suggest that would-be health reformers won’t have the moral authority to confront our system’s inefficiency unless they’re also prepared to end its cruelty. If President Bush had tried to rein in Medicare spending, he would have been accused, with considerable justice, of cutting benefits so that he could give the wealthy even more tax cuts. President Obama, by contrast, can link Medicare reform with the goal of protecting less fortunate Americans and making the middle class more secure.

As a practical, political matter, then, controlling health care costs and expanding health care access aren’t opposing alternatives — you have to do both, or neither.

April Greer probably just wants the peace of mind that she can get treatment when she needs it, without going deeply and overwhelmingly into debt in the process. Long-term budgetary constraints and bending cost curves matter less to her. But Krugman is right that the two are not in conflict, and must be packaged together.

I'm happy April is getting a small raise for her troubles today. I want her to get a health care system that honors her struggle and provides her security. But Senators need a three-week recess, so she'll have to wait.

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Budget By Sunrise

Maybe you've been following along at Calitics, but if you haven't, the Senate essentially passed all of their budget bills, albeit with difficulty, and adjourned a session that started last night around 7:30pm at 6:16 this morning. The Assembly is still working through some of the final trailer bills, including the local government raids and the offshore drilling proposal at Tranquillon Ridge. Here's an incomplete roundup from the LA Times.

The worst elements of the bill were passed while everyone was asleep. They must be very proud of their work.

And of course, this is a rolling, perpetual crisis. Dan Walters is correct today when he says that the state now operates on 5-month budget cycles.

There have been some discussions about shifting to a two-year budget cycle to ease the one-year cycle's tight – and usually unmet – timetable. In reality, though, the state has shifted to a five-month cycle, with the latest version of the budget, which was undergoing the dreary drill of adoption Thursday night, being the latest example [...]

If the five-month cycle holds true, the deal's deficiencies will be acknowledged in October, when the state must redeem the IOUs it's sending to creditors. And then legislators will return to Sacramento to be entertained by lobbyists, plug the new holes and collect about $1,200 a week in tax-free per diem checks.

In January, the governor will propose a 2010-11 budget and the game will begin again.

It's as much that they cannot fathom the extremity of the real budget problems as that the cumulative effect of kicking the can becomes greater with every kick. Of course, there's a way out - you could reduce useless tax breaks to corporations and increase revenue. But that's deeply unserious and verboten.

If ever the need for a Constitutional convention to fix the broken system in Sacramento has become clear, it's now, when 40 years of progress has been reversed in the dead of night.

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Thursday, July 23, 2009

Redevelopment Securitization Scheme Threatens CA Budget Deal

Budget votes, originally scheduled in the Legislature for 2:00, have now been pushed back multiple times. The lastest word we have is 7:00 or 8:00, according to Karen Bass.

One major hurdle seems to be the securitization of redevelopment agency funds, which would net about $7.4 billion dollars over the life of the borrowing. Yesterday, Mark DeSaulnier described that provision to me as both "insane" and "illegal." Insane I expect, but illegal would mean that it could not be enacted tonight. And we are now hearing from several sources that the redevelopment legality is throwing a wrench into the budget package.

Remember, this is something that City of Industry lobbyists have been seeking for years, primarily so they can fund an outdoor stadium and attract an NFL franchise. The way that it's been structured, according to reports, is that this borrowing maneuver, which would tie up about 10% of total property tax revenue for up to 30 years, would replace the seizure of local government funds through Prop. 1A and HUTA (the gas tax). If the redevelopment securitization gets shot down, the borrowing would come from the above.

This was described to me last night by DeSaulnier as a shadow play, so Dennis Hollingsworth and his buddies can say they tried not to take from local governments. But it's completely unclear whether anyone would vote to take those funds through Prop. 1A and HUTA, which would blow enough of a hole to scuttle the deal.

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Bravely Bold Sir Dubya

Time decided to do some reporting about the final days in the Bush bunker, particularly about Dick Cheney's efforts to extract a pardon for his pal Scooter Libby. It's clearly from Bush's perspective, but nevertheless it's a pretty fascinating article just for seeing how the Bush loyalists spin the tale.

Petitions for pardons are usually sent in writing to the White House counsel's office or a specially designated attorney at the Department of Justice. In Libby's case, Cheney simply carried the message directly to Bush, as he had with so many other issues in the past, pressing the President in one-on-one meetings or in larger settings. A White House veteran was struck by his "extraordinary level of attention" to the case. Cheney's persistence became nearly as big an issue as the pardon itself. "Cheney really got in the President's face," says a longtime Bush-family source. "He just wouldn't give it up."

And there was a darker possibility. As a former Bush senior aide explains, "I'm sure the President and [chief of staff] Josh [Bolten] and Fred had a concern that somewhere, deep in there, there was a cover-up." It had been an article of faith among Cheney's critics that the Vice President wanted a pardon for Libby because Libby had taken the fall for him in the Fitzgerald probe. In his grand-jury testimony reviewed by TIME, Libby denied three times that Cheney had directed him to leak Plame's CIA identity in mid-2003. Though his recollection of other events in the same time frame was lucid and detailed, on at least 20 occasions, Libby could not recall details of his talks with Cheney about Plame's place of employment or questions the Vice President raised privately about Wilson's credibility. Some Bush officials wondered whether Libby was covering up for Cheney's involvement in the leak of Plame's identity.

That makes it seem like Bush just wanted to separate himself from the Libby case altogether, despite the fact that Libby was a special adviser to the President, not the Vice President, and he was protecting both Bush and Cheney. It makes sense for Bush to compartmentalize the Libby leak, as if he were an innocent bystander, and refusing to pardon obviously helps him in that case. But it's not true at all. Marcy Wheeler has a lot more on this.

But this just blew me away. After Cheney lays out the case for a pardon, repeatedly, incessantly, for weeks:

A few days later, about a week before they would become private citizens, Bush pulled Cheney aside after a morning meeting and told him there would be no pardon. Cheney looked stricken. Most officials respond to a presidential rebuff with a polite thanks for considering the request in the first place. But Cheney, an observer says, "expressed his disappointment and disagreement with the decision ... He didn't take it well."

Two days after that, Libby, who hadn't previously lobbied on his own behalf, telephoned Bolten's office. He wanted an audience with Bush to argue his case in person. To Libby, a presidential pardon was a practical as well as symbolic prize: among other things, it would allow him to practice law again. Bolten once more kicked the matter to the lawyers, agreeing to arrange a meeting with Fielding. On Saturday, Jan. 17, with less than 72 hours left in the Bush presidency, Libby and Fielding and a deputy met for lunch at a seafood restaurant three blocks from the White House. Again Libby insisted on his innocence. No one's memory is perfect, he argued; to convict me for not remembering something precisely was unfair. Fielding kept listening for signs of remorse. But none came. Fielding reported the conversation to Bush.

OK, is it normal for the subject of a possible Presidential pardon to personally lobby for it on his own behalf? Has that ever happened before? If it has, I don't recall it.

The article is decent enough, but don't start to drink a glass of water when you read this part, or you're in for a surefire spit-take:

While packing boxes in the upstairs residence, according to his associates, Bush noted that he was again under pressure from Cheney to pardon Libby. He characterized Cheney as a friend and a good Vice President but said his pardon request had little internal support. If the presidential staff were polled, the result would be 100 to 1 against a pardon, Bush joked. Then he turned to Sharp. "What's the bottom line here? Did this guy lie or not?"

The lawyer, who had followed the case very closely, replied affirmatively.

Bush indicated that he had already come to that conclusion too.

"O.K., that's it," Bush said.

Yes, that moral paragon, truth-teller extraordinaire, George W. Bush, Honest George I think they called him, comes down firmly on the side of truth in virtually every circumstance. History will judge him as the most forthright human who ever bestrode the earth. A colossus among men.

Incidentally, the man, Jim Sharp, that Bush is talking with here? It's his own defense attorney.

... you have to love Cheney's response to the story. I guess the Bush loyalists got under his skin.

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The Larger Context

California's troubles have been well-documented. But as I've said on multiple occasions, while we may be an acute example of the problems with state budgets in an economic downturn, we are not alone. And the decisions, some forced, some unforced, of the nation's governors in responding to these challenges are unquestionably threatening economic recovery.

It’s easy enough, of course, to mock state governments nowadays, what with California issuing I.O.U.s to pay its bills and New York’s statehouse becoming the site of palace coups and senatorial sit-ins. But the real problem isn’t the fecklessness of local politicians. It’s the ordinary way in which state governments go about their business. Think about the $787-billion federal stimulus package. It’s built on the idea that during serious economic downturns the government can use spending increases and tax cuts to counteract the effects of consumers who are cutting back on spending and businesses that are cutting back on investment. So fiscal policy at the national level is countercyclical: as the economy shrinks, government expands. At the state level, though, the opposite is happening. Nearly every state government is required to balance its budget. When times are bad, jobs vanish, sales plummet, investment declines, and tax revenues fall precipitously—in New York, for instance, state revenues in April and May were down thirty-six per cent from a year earlier. So states have to raise taxes or cut spending, or both, and that’s precisely what they’re doing: states from New Jersey to Oregon have raised taxes in the past year, while significant budget cuts have become routine and are likely to get only deeper in the year ahead. The states’ fiscal policy, then, is procyclical: it’s amplifying the effects of the downturn, instead of mitigating them. Even as the federal government is pouring money into the economy, state governments are effectively taking it out. It’s a push-me, pull-you approach to fighting the recession.

The stimulus package provided some money for state fiscal stabilization, but that turned a package designed to create jobs and circulate money into the economy into simply a life raft. The states have both sucked up some of that money and directly counteracted it through their actions, so that an already too-small stimulus shrinks even further. State and local governments are 1/8 of our total GDP, and their fiscal austerirty in the midst of crisis has a very damaging economic effect.

In this article, James Surowiecki argues that federalism is starting to crack in the face of extreme economic calamity. Some of the elements of the stimulus that are national priorities - high speed rail, a smart national power grid - must be funneled through an inefficient and often dysfunctional state and local process. It simply makes things difficult to have so much decentralization in projects designed to move across state lines. So what can be done? We can move big items like Medicaid under federal control with local administration. Or we can set up a permanent federal fiscal stabilization fund, maybe kicked off in a second stimulus, to massage the states through tough times. It's almost a rainy day fund at the federal level.

But something must be done. We are destroying ourselves from within by leaving things as they are.

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