[R-G] [BillTottenWeblog] Big Business Is Making Sure It Wins the Presidency

[Bill Totten]

by Matt Taibbi, RollingStone.com

www.alternet.org (August 09 2008)


Remember the total, hideous, inexcusable absence of oversight that has
been the great hallmark of George Bush's America for almost eight years
now? Well, now we're getting to see that same regulatory malfeasance
applied to yet another cornerstone of our political system. The Federal
Election Commission - the body that supposedly enforces campaign-finance
laws in this country - has been out of business for more than six
months. That's because Congress was dragging its feet over confirmation
hearings for new FEC commissioners, leaving the agency without a quorum.
The commission just started work again for the first time on July 10th
under its new chairman, Donald McGahn, a classic Republican Party yahoo
whose chief qualifications include representing Tom DeLay, the corrupt
ex-speaker of the House, in matters of campaign finance.

Apart from the obvious absurdity of not having a functioning
election-policing mechanism in an election year in the world's richest
democracy, the late start by the FEC makes it almost impossible for the
agency to do its job. The commission has a long-standing reluctance to
take action in the last months before a vote, a policy designed to help
prevent federal regulators from influencing election outcomes. Normally,
the FEC tries to root out infractions and loopholes - fining campaigns
for incomplete reporting, or for taking shortcuts around spending limits
- in the early months of a campaign season. But that ship sailed way too
long ago to take the stink off the 2008 race.

"The time for setting the ground rules was earlier", says Craig Holman,
a lobbyist with the watchdog group Public Citizen. "There isn't time to
do much now".

That's especially true given the magnitude of what we're dealing with
here: the biggest pile of political contributions in the history of free
elections, nearly a billion dollars given to presidential candidates in
this season alone. Because the FEC has been dead in the water for so
long, it's likely that we'll still be in the dark about a large chunk of
this record manure pile of campaign contributions when we go to vote in
November.

But that doesn't mean that a little sifting through campaign records
doesn't tell us quite a lot about who's backing whom in these races. The
truth is that the campaigns of both Barack Obama and John McCain are
being inundated with cash from more or less exactly the same gorgons of
the corporate scene. From Wall Street to the Big Oil powerhouses to the
military-industrial complex, America's fat-cat business leaders know
that the Animal House-style party of the last eight years that made
almost all of them rich with bonuses, government contracts and bubble
profits is about to come to an end, and someone is going to have to pay
to clean up the mess. They want that someone to be you, not them, and
they've spared no expense to make sure both presidential candidates will
be there to bail them out next year.

They're succeeding. Both would-be presidents have already sold us out.
They've taken the money and run - completing the cyclical transformation
of the American political narrative from one of monopolistic Republican
iniquity to an even more depressing tale about the overweening power of
corporate money and the essentially fictitious nature of our two-party
system.

In layman's terms, we've gone from being screwed to being fucked. Who
knows - maybe Barack Obama will surprise us if he wins the election. But
if you look at the money, it doesn't look good.

Thanks in part to the dormant FEC, corporate America has had even easier
access to the candidates than usual in its effort to buy off the next
government before the crash. In fact, this election has seen some
excellent new innovations in the area of campaign-fundraising
atrocities. Chief among them is the rise of so-called "joint committees".

It used to be that campaigns could raise a maximum of $2,300 from each
individual. Now, both candidates - but especially McCain, who far
outstrips Obama in this area - routinely hold fundraisers in which
individuals can give far more to a joint committee. Technically, the
candidate still pockets only $2,300 in contributions. The bulk of the
money raised - in McCain's case, a whopping $70,100, or thirty times the
previous limit - goes to the state and national arms of the candidate's
party, which can then spend the unprecedented haul on behalf of the
candidate. "This allows CEOs to walk in the door and drop $70,100", says
Holman. "It basically allows campaigns to exceed the spending limits".

McCain has raised more than $63 million via these joint committees,
thanks to more than 1,000 "megadonors" who have each given at least
$25,000 to his campaign effort. Obama, by contrast, has some 471
megadonors - and a close examination of their backgrounds underscores
some of the differences in corporate America's attitudes toward the two
candidates.

One of McCain's chief sources of corporate money is the private-equity
firm Kohlberg Kravis Roberts, memorialized for its takeover of RJR
Nabisco in the movie Barbarians at the Gate. Through the pretext of
joint committees, ten KKR executives have given McCain $285,000, and
it's not hard to figure out why. Two of McCain's key campaign proposals
- lowering the corporate tax rate to 25 percent and making purchases of
industrial equipment fully deductible - would save a single KKR
subsidiary, Energy Future Holdings, $49 million.

"Just in his tax policies alone, McCain is saving corporate America $175
billion a year", says James Kvaal, who analyzed McCain's tax policy for
the nonprofit Center for American Progress.

McCain has also raked in big contributions from two other giants of the
buyout world: the Carlyle Group (famous for its close ties to the Bush
administration) and the Blackstone Group (whose co-founder, Pete
Peterson, wrote a $28,500 check to McCain after he took home almost $1.8
billion from a public offering last year). McCain has also received
monstrous sums from hedge-fund managers, attracted by his pledge to keep
the tax rate on their earnings at only fifteen percent. Executives and
family members in a single hedge fund, Knott Partners, have contributed
some $225,700 to McCain's campaign.

Then there's the predictable influx of cash from would-be military
contractors. John Lehman, a former secretary of the Navy whose firm
builds the Superferry transport vessel, not only donated $28,500 of his
own money, but bundled at least $250,000 for McCain from other donors.
Donald Bollinger, who is a contractor on the controversial Littoral
Combat Ship, gave $27,300 and bundled a whopping $500,000. Anyone want
to bet on a decrease in Naval appropriations in a McCain presidency?

McCain has also received big money from telecommunications magnates. The
senator has always been a friend to the industry: Back in 2003, just
four days after AT&T sent him a check for $10,500, he sponsored a bill
to ban state and local taxes on Internet service. Since 2007, McCain has
taken in some $1.3 million from the communications industry. Just four
members of the McCaw family, which owns the telecommunications firm
Eagle River, have kicked in $123,200. McCain's campaign manager, Rick
Davis, was a former lobbyist for BellSouth, Verizon and SBC
Communications. His deputy campaign manager, Christian Ferry, was a
partner to Davis at Verizon. One of his chief advisers, Charlie Black,
is the head of the lobbying firm BKSH and Associates, which represents
AT&T. His Senate chief of staff, Mark Buse, worked for AT&T Wireless.
All told, of 66 current and former lobbyists working for McCain, some 23
come from the telecommunications industry.

Given McCain's telecom backing, it's not surprising that the senator has
had one of his characteristic changes of heart. As recently as last
November, McCain was staunchly opposed to retroactive immunity for
telecommunication companies that took part in Bush's illegal spying on
American consumers, saying their actions "undermine our respect for the
law". Now, jammed to the gills with telecom cash, McCain calls himself
an "unqualified" supporter of immunity, praising the telecom industry's
warrantless wiretapping as "constitutional and appropriate".

All the same, plenty of other evidence suggests that much of Wall Street
is betting on an Obama win. In fact, some observers believe that KKR
announced a multibillion-dollar public offering this summer because it
expects McCain to lose. "They're doing the public offering now so that
the compensation can be taxed at the lower rate while Bush is still in
office", says a strategist for a major labor union. "They're betting
Obama is going to win, and they're getting their money while they can".

Other companies are getting in on the ground floor with the new chief by
stuffing money in his ears. Overall, Obama is flat-out kicking McCain's
ass when it comes to Wall Street contributions, raking in nearly $9
million from securities and investment executives, compared to $6.2
million for McCain. Obama has received more contributions from Goldman
Sachs than from any other employer - more than $627,000 at this writing
- not to mention $398,021 from JP Morgan Chase, $353,922 from Lehman
Brothers and $291,388 from Morgan Stanley. Even among hedge-fund
executives, who have an unequivocal interest in electing McCain, Obama
is whipping the Republican, collecting $500,000 more than McCain. All of
which begs the question: Why would corporate giants like these throw so
much weight behind a man who promises to strip them of billions in tax
breaks?

Sadly, the answer to that question increasingly appears to be that Obama
is, well, full of shit. He has made no bones about his plans to raise
income by soaking the rich, promising to roll back the Bush tax cuts for
people making over $250,000, increase the top tax rate on capital gains
to 25 percent and raise the top rate on qualified dividends. He has also
pledged to deliver a real stomach punch to hedge-fund managers, raising
the tax rate on most of their income from fifteen percent to 35 percent.

These populist pledges sound good, but many business moguls appear to be
betting that the tax policies, like Obama himself, are only that:
something that sounds good. "I think we don't want to make too much of
his promises on taxes", says Robert Pollin, professor of economics at
the University of Massachusetts. "Not all of these things will happen".
Noting the overwhelming amount of Wall Street money pouring into Obama's
campaign, even elitist fuckwad David Brooks was recently moved to write,
"Once the Republicans are vanquished, I wouldn't hold your breath
waiting for that capital-gains tax hike".

Those worried that Obama might be all talk when it comes to needed
reform had a real scare in July, when the senator failed to show up to
vote for the Stop Excessive Speculation Act, a bill designed to curb
rampant oil speculation. Oil speculators provide the perfect microcosm
of what happened to the economy under Bush. Back in 2001, investment
banks like Goldman Sachs and JP Morgan got together and created an
online exchange called the ICE for trading energy commodities. The ICE
ended up buying the British-regulated International Petroleum Exchange;
it then opened trading windows in the US, allowing Wall Street
investment banks to make oil-futures trades on American soil, on their
very own commodities exchange, without any federal regulation whatsoever.

"In financial terms, they were playing blackjack at tables where they
themselves were the dealers, in casinos they themselves owned", says
Warren Gunnels, a senior policy adviser to Senator Bernie Sanders. "It
was crazy". Trading on the ICE had a massive impact on US gasoline
prices, and more than one legislator wondered if energy speculators were
manipulating the market, as energy traders like Enron had been before.
The speculation bill was designed to regulate the ICE and place limits
on trades. But on the day before Obama returned from his eight-day,
eight-country, megadazzling international photo op, Democrats failed by
a vote of 50-43 to force a vote on the bill, as heavy lobbying by
investment banks like Goldman Sachs torpedoed the effort.

Not only did Obama not show up to vote, he appeared at a public forum
three days later flanked by Jon Corzine and Robert Rubin, two former
Goldman executives, to discuss how to revive the economy. Here you have
the basic formula of campaign contributions in a nutshell: Powerful
investment bank gives big money to candidate, needed reform requires
candidate to cross said investment bank, candidate pussies out and finds
way to be gone at the moment of truth, candidate resurfaces later in
arms of aforementioned investment bankers.

Obama's absence on oil speculation was eerily reminiscent of his
previous decision to change his mind about giving retroactive immunity
to telecom companies for spying on Americans. Obama withdrew his pledge
to filibuster the immunity bill right around the time the Democrats
announced that AT&T would be sponsoring the Democratic convention. So no
filibuster on retroactive immunity from the top Democrat - but
conventiongoers in Denver will get tote bags emblazoned with the AT&T
logo. So that's something.

Look, we all knew this was coming. Once Obama vanquished Hillary
Clinton, it was inevitable that his campaign would start roping in the
Clinton moneymen for the fall confrontation with McCain. Among those
snagged by Obama were Iranian millionaire and former Democratic
Senatorial Campaign Committee chairman Hassan Nemazee, venture
capitalist Alan Patricof and the touchingly plugged-in Wall Street power
couple Maureen White (First Boston) and Steven Rattner (Morgan Stanley).
Rattner and White, the former chief fundraiser for the DNC, are longtime
friends of the Clintons; she quit the DNC in 2006 to build Hillary's war
chest, while he backed Joe Lieberman against Ned Lamont and flirted with
a Mike Bloomberg presidential run. Such are the people who are now
whispering in Obama's ear.

Over the summer, the Obama camp has relentlessly pushed the notion that
its record fundraising is mainly the result of small online donations.
The first presidential candidate to raise so much money that he could
afford to eschew the spending limits that would be imposed if he
accepted federal matching funds, Obama claims that he opted out of
public funding so that he could have a campaign "truly funded by the
American people". And indeed, he has a record number of small donors,
with some 45 percent of his campaign cash coming from contributions
smaller than $200.

Which is a great percentage - but it's only eight points better than
John Kerry in 2004 and only fourteen points better than George Bush that
same year. In truth, Obama is still raising tons of money from big
corporate donors. In June alone, as Obama was raking in more than $30
million from small donors, he also bagged $6 million in a single
fundraiser at Ethel Kennedy's home in Virginia and another $5 million at
an event in Hollywood. But time and time again, you see Obama aides
boasting about how the day of the big-dollar donor is over. "More people
are involved, and I think that necessarily dilutes the impact of any
individual - which is probably a good thing", one prominent Obama
supporter recently declared. This staunch champion of the small donor
happened to be none other than James Rubin, son of former Goldman Sachs
co-chairman Bob Rubin.

Obama's decision to embrace Clinton's moneymen coincided with his
decision to attend a public forum on economic policy with an A list of
Clinton-era economic advisors, including Rubin and Corzine. "The message
is that he's going to be a friend to Wall Street, just as Bill Clinton
was a friend to Wall Street", says Pollin. "Wall Street will want to be
at the head of the table".

By now it should be clear what type of service Wall Street will demand.
The financial disaster dumped on us by eight years of Bush's
mismanagement has left America with the prospect of short-term solutions
in the form of massive government bailouts, and long-term solutions in
the form of reform and regulation. A big chunk of the $1 billion in cash
that will be spent on the presidential race this year represents Wall
Street's desire to make sure that both candidates can be counted on to
make the short-term bailouts large and passionate, and the reforms
gentle and halfhearted. "They want to make sure there's socialism when
they need it - bailouts - and capitalism when they need that", says Pollin.

Both candidates are already falling all over themselves to signal their
business-friendly approach to the economy. McCain entered this election
with a reputation as a strict Goldwater conservative. "I have always
been committed to the principle that it is not the duty of government to
bail out and reward those who act irresponsibly", he declared. McCain
also sounded off in the past about troubled quasi-governmental lenders
Freddie Mac and Fannie Mae, pledging to "make them go away" and to strip
them of their right to lobby.

But this year, McCain - perhaps emboldened by the $238,100 he got from
seven JP Morgan Chase executives or the $500,000 bundled for him by
Chase executive James Lee Jr - caved in and supported Chase's outrageous
government-backed acquisition of Bear Stearns. He also backed the recent
bailout of Freddie Mac and Fannie Mae - no surprise given that former
Fannie Mae lobbyists are serving as his chief of staff and the head of
his vice presidential vetting panel.

Obama also supported the Freddie Mac-Fannie Mae rescue, and that, too,
is no surprise, given that he hired one former chairman of Fannie Mae to
chair his vice presidential vetting panel and hired another former
Fannie Mae chairman to serve as his consultant on housing issues. Most
of us will never get within a hundred miles of a single Fannie Mae
chairman, but Obama has already hired two - and he isn't even president yet.

This, folks, is the way of the world. Forget all the promises to make
the rich pay their fair share. As the candidates get closer to office,
the actual paying customers move to the front of the line.

Sadly, both candidates have an extensive history of being dependable
pals of campaign contributors. Back in 2000, when Obama was a state
senator in Illinois, an entrepreneur named Robert Blackwell Jr hired him
to be his lawyer, paying him a monthly retainer of $8,000 - big money
for a part-time legislator with an annual salary of just $58,000. A few
months later, Obama sent a letter urging state tourism officials to give
a grant to one of Blackwell's companies, the amusingly named Killerspin,
to fund a table-tennis tournament. Killerspin received $320,000 in
public funds; Obama pocketed $112,000 in fees from Blackwell.

So far this year, Blackwell has bundled more than $100,000 for Obama's
campaign. Looks like there's going to be a shitload of table-tennis
tournaments all across America next year.

McCain also likes to write letters for big contributors. In 1998, four
months after BellSouth contributed $16,750 to the senator, he sent a
letter to the FCC asking it to give "serious consideration" to the
company's request to enter the long-distance market. He later wrote
letters on behalf of Paxson Communications, which donated $20,000 and
let him use their company jet, as well as Ameritech and SBC
Communications, which raised $120,000 for McCain at a time when they
were seeking permission to merge.

McCain's still sticking by that gang. Former Ameritech chairman Richard
Notebaert bundled more than $100,000 for him this year, and two of
McCain's key fundraisers, Peter Madigan and Tim McKone, hail from SBC.
The point is that politicians are intensely loyal to the people who give
them money - and not anywhere near as loyal to the promises they've made
to suckers like us. No matter who's in the White House, the direction of
the government has remained remarkably stable. Clinton's treasury
secretary, Rubin, was a Goldman Sachs man; Henry Paulson, the current
secretary under Bush, is also a Goldman Sachs man. It'll probably be a
Goldman man again next year. Meet the new boss, same as the old boss. In
sickness or in health, the faces may change, but the money remains.
"It's not an accident that both administrations picked for leading
economic advisers people from Goldman Sachs", says Pollin.

The really distressing thing about all of this is the signal it sends to
Americans. Goldman Sachs posted a record profit of $11 billion last
year, much of it from betting against the subprime mortgage market they
themselves helped to fuck up. That little energy exchange Goldman set
up, the ICE, made a profit of $240 million last year, as gas prices
skyrocketed. It may suck to be you right now, but all that pain isn't so
bad if you are a big oil speculator.

When you live in million-dollar Manhattan townhouses and make billions
in profits betting on the pain of the ordinary foreclosed homeowner, you
shouldn't get to run around on TV with the prospective president on your
arm. You should be hung by your balls. But that's not the way it works,
and despite what you might have heard about "change", it probably never
will be.

For all the excitement that Barack Obama has garnered, and all the talk
about a new day in Washington, it would be tragic if the real legacy of
his election victory was to finally expose the essentially unchanging,
oligarchic nature of our political system. It's the same old story:
Money talks, and bullshit walks. And don't be surprised if we're the
ones still walking after November.

_____

Matt Taibbi is a writer for Rolling Stone.

(c) 2008 RollingStone.com All rights reserved.

http://www.alternet.org/story/94334/


TO POST A COMMENT, OR TO READ COMMENTS POSTED BY OTHERS, please click
on the word "comment" highlighted at the end of the version of this
essay posted at http://billtotten.blogspot.com/