According to a new report released Monday by the Sunlight Foundation, 78% of 2012 outside election spending can be attributed to the 2010 Citizens United ruling, which allows unregulated amounts of corporate and otherwise outside campaign donations.
As of Sunday, outside spending hit roughly $465 million, more than double the total for the entire 2010 campaign. This election cycle is the first to follow the Supreme Court's landmark Citizens United decision.
Of the $465m of outside money that has been spent on US congressional and presidential campaigns so far, at least $365m can be directly attributed to funds enabled by Citizens United. Super Pac spending alone amounts to $272m, according to the statistics laid out in the report.
Almost $93 million was donated from corporations, trade associations and non-profits. The latter have been allowed under the Supreme Court ruling "to spend in unlimited amounts and...because of their tax status, are not required to disclose the source of their funds to the Federal Election Commission," states Kathy Kiely at the Sunlight Foundation.
"This money enabled outside groups to run shadow campaigns for or against candidates of their choice."
The 2010 ruling by the supreme court in the case of Citizens United vs Federal Election Commission allowed corporations and unions to spend unlimited money on campaigning, enabling Super Pacs to spend unlimited amounts as long as they had no coordination with the candidates they support.
In reality, those running Super PACs have often have close ties to political parties. Former George W Bush adviser Karl Rove runs the conservative American Crossroads Super Pac, while Restore Our Future, a pro-Mitt Romney Super Pac, was founded by former Romney aides. [...]
The Sunlight Foundation's data shows a heavy skew towards negative campaigning, with $99.2m so far spent supporting a candidate and $360.7m opposing a candidate. Some $131.1m has been spent on communications opposing President Barack Obama, with a relatively small $50.7m spent opposing Mitt Romney.
Which is the more redistributionist of our two parties? In recent decades, as Republicans have devoted themselves with laser-like intensity to redistributing America’s wealth and income upward, the evidence suggests the answer is the GOP.
The most obvious way that Republicans have robbed from the middle to give to the rich has been the changes they wrought in the tax code — reducing income taxes for the wealthy in the Reagan and George W. Bush tax cuts, and cutting the tax rate on capital gains to less than half the rate on the top income of upper-middle-class employees.
The less widely understood way that Republicans have helped redistribute wealth to the already wealthy is by changing the rules. Markets don’t function without rules, and the rules that Republican policymakers have made since Ronald Reagan became president have consistently depressed the share of the nation’s income that the middle class can claim.
Part of the intellectual sleight-of-hand that Republicans employ in discussions of redistribution is to reserve that term solely for government intervention in the market that redistributes income downward. But markets redistribute wealth continuously. In recent decades, markets have redistributed wealth from manufacturing to finance, from Main Street to Wall Street, from workers to shareholders. Rules made by “pro-market” governments (including those of “pro-market” Democrats) have enabled these epochal shifts. Free trade with China helped hollow out manufacturing; the failure to regulate finance enabled Wall Street to swell; the opposition to labor’s efforts to reestablish an even playing field during organizing campaigns has all but eliminated collective bargaining in the private sector.
The conservative counter to such liberal cavils is to assert that the market increases wealth, which will eventually descend on everyone as the gentle rains from heaven. Decrying such Keynesian notions as unions or federally established minimum wages, hedge fund guru Andy Kessler recently argued in the Wall Street Journal that “it is workers’ productivity that drives long-term wage gains, not workers’ wages that drive growth.”
But Kessler assumes — and this is the very essence of the “trickle-down” argument — that workers reap the rewards of productivity gains. Believing and asserting that requires either ignorance or willful denial of economic history. The only time in U.S. history when workers substantially benefited from productivity gains was the three decades that followed World War II, when median household income and productivity gains both increased by 102 percent. Not coincidentally, that was also the only period of genuine union power in U.S. history, and the time when the tax code was at its most progressive. During the past quarter-century, as progressivity was lessened and unions diminished, all productivity gains have gone to the wealthiest 10 percent, according to research published by the National Bureau of Economic Research. In 1955, at the height of union strength, the wealthiest 10 percent received 33 percent of the nation’s personal income. In 2007, they received 50 percent, Economic Policy Institute data show.
If that’s not redistribution, I don’t know what is.
The problem is not just that everyone but the wealthy is claiming a smaller share of the nation’s income; the absolute amount of income they’re getting is declining as well. Median household income has dropped to the levels of the mid-1990s, according to Pew analysis of census data, while the income of the 400 wealthiest Americans rose by a tidy $200 billion last year, according to data released this month by Forbes magazine.
If that’s not redistribution, I don’t know what is.
Indeed, the United States has experienced an upward redistribution so profound that it affects far more than incomes. Whole sectors of the economy and regions of the country have been decimated by these economic changes. The descent in all manner of social indexes is most apparent among poorly educated whites. Conservative commentator Charles Murray has documented in his new book the decline in marriage rates and family stability within the white working class. And now, as the New York Times’ Sabrina Tavernise has reported, that decline includes longevity as well. While other Americans’ life expectancy has advanced, the life expectancy of whites without high school diplomas has declined since 1990 — by three years among men and five years among women.
The market is not just redistributing income in the United States, then. It is redistributing life.
So, which party can claim credit for this — the real redistribution this nation has experienced over the past 30 years? Many Democrats have been complicit in this calamity by their indifference to the consequences of deregulation and trade. But the trophy for promoting the policies that have redistributed wealth, family stability and longevity upward goes to the Republicans, whose standard-bearers are championing even more radical versions of these policies today.
Craig Unger Not long ago, Karl Rove seemed toxic: the brains of a disastrous presidency, tarred by scandal. Today, as the mastermind of a billion-dollar war chest—and with surrogates in place in the Romney campaign—he’s the de facto leader of the Republican Party. But in Rove’s long game, 2012 may be just the beginning. On Wednesday, April 21, 2010, about two dozen Republican power brokers gathered at Karl Rove’s Federal-style town house on Weaver Terrace in northwest Washington, D.C., to strategize about the fall midterm elections.
Rove, then 59, had hosted this kind of event many times before. Six years earlier, he’d held weekly breakfasts for high-level G.O.P. operatives to plan for the 2004 fall elections. Back then, as senior adviser to President George W. Bush, Rove oversaw Bush’s re-election campaign. More important, he was attempting to implement a master plan to build a permanent majority through which Republicans would maintain a stranglehold on all three branches of government for the foreseeable future. This was not simply about winning elections. It represented a far more grandiose vision—the forging of a historic re-alignment of America’s political landscape, the transformation of America into effectively a one-party state.
But now Rove was no longer in the White House. He had been one of the most powerful unelected officials in the United States, but, to many Republicans, his greatest achievement—engineering the presidency of George W. Bush—had become an ugly stain on the party’s reputation.
After the two biggest political scandals of the decade, the Valerie Plame affair and the outcry following the firing of nine U.S. attorneys, Rove resigned in 2007 under a cloud of suspicion, barely escaping indictment. His longtime patron then left the White House with the lowest approval rating in the history of the presidency—22 percent. And in 2008 the Democrats had vaporized Rove’s dreams by winning the ultimate political trifecta—the House, the Senate, and the White House. Finally, on the right, there was the insurgent Tea Party, to which he personified the free-spending Bush era and the Republican Party’s Establishment past, not its future.
But Rove had an incredibly powerful ally. It could be fairly said that no other political strategist in history was so deeply indebted to the United States Supreme Court. In December 2000, in Bush v. Gore, one of the most notorious decisions in its history, by a five-to-four vote, the Court effectively resolved the 2000 United States presidential election in favor of Rove’s most famous client, George W. Bush. Then, on January 21, 2010, three months before his luncheon, the Supreme Court once again provided the answer to Karl Rove’s prayers, this time in the form of Citizens United v. Federal Election Commission.
The Court ruled in a five-to-four decision that the First Amendment prohibits the government from limiting spending for political purposes by corporations and unions and effectively granted corporations and unions the same free-speech rights enjoyed by individual citizens. The first decision legitimized Rove’s power during the two terms of George W. Bush. The second one allowed Rove to re-establish his power and gave a new life to his vision of creating a “permanent Republican majority.”
The implications of the Citizens United decision were staggering. In the 2008 election cycle, non-campaign organizations of all types—whether they were for-profit corporations, nonprofit groups, or unions—had been prohibited from running broadcast, cable, or satellite communications or advertisements that mentioned a candidate within 60 days of a general election or 30 days of a primary. To be sure, there were many ways for wealthy individuals or corporations to funnel money to political-action committees. But the 2002 Bipartisan Campaign Reform Act, better known as the McCain-Feingold Act, specifically prohibited corporations (including non-profits) and unions from engaging in “electioneering communications” intended to influence the outcome of an election. As a case in point, Citizens United, a conservative nonprofit group, produced Hillary: The Movie, a film critical of then senator Hillary Clinton, but had been prevented by the courts from promoting it on television or airing it during the 2008 election season. Citizens United appealed all the way to the United States Supreme Court—and won.
The gist of the decision could be boiled down to two words: Anything goes. Corporations were people, too. And just as John Q. Public could say anything he liked about politics, thanks to an extraordinarily broad interpretation of the meaning of “freedom of speech,” come election-time, so too could Wall Street, Big Oil, pharmaceutical companies, the tobacco industry, and billionaire cranks flood the airwaves with thousands of political commercials.
In the immediate aftermath of the ruling, thousands of articles were written calling Citizens United a truly historic development in the American electoral process, but one voice was conspicuous by its absence. Karl Rove did not mention the subject in his Wall Street Journal columns. Karl Rove did not mention it during his appearances on Fox News. In fact, not a word from Karl Rove on the subject was to be found in any major media. This, despite the fact that he was indisputably a leading expert on the subject and that three out of the five conservative justices voting in the majority—Clarence Thomas, John Roberts, and Samuel Alito—had been given lifetime appointments by his patrons, George H. W. and George W. Bush, and, most important, despite the fact that he would become arguably the single greatest beneficiary of the ruling.
And so, as a result of Citizens United, the super-pac was born. A new kind of political-action committee, called an “independent expenditure-only committee” in federal election code and super-pac everywhere else, super-pacs suddenly provided a medium through which unlimited sums could be raised from corporations and unions as well as wealthy individuals, and be spent with the express purpose of electing or defeating a specific candidate. As long as the new super-pacs did not coordinate their efforts with the candidates themselves—a somewhat muddy and dubious constraint—they could now pour unlimited money into the election. (Under an earlier decision, the 1976 Buckley v. Valeo ruling, the Supreme Court had already struck down certain limitations on expenditures by individuals.)
With his keen eye for strategy and his ties to disaffected millionaires in the G.O.P. establishment, Rove was the first to seize the initiative. He immediately met with Ed Gillespie, the former Republican National Committee chair who had also served in the Bush administration. The two men were a potent duo. “Ed’s got the better rap and Karl’s got the better Rolodex,” a Republican lobbyist told the National Journal. Within three weeks of the Supreme Court decision, American Crossroads, a new 527 advocacy group, had registered its Web site. Rove’s exact relationship to the group was informal and was described by Politico as providing “a laying-on of hands” to encourage wealthy Republican donors. He and Gillespie took off for Texas to meet with Rove’s wealthy political donors, the money machine that had served him for more than 25 years, and came away with a major pledge from Dallas billionaire Harold Simmons, a longtime donor to Rove’s causes. Crossroads GPS, a sister group, was in the works under almost identical leadership. Thanks to its nonprofit status, it would not have to disclose the identity of its contributors.
In short order, American Crossroads had obtained commitments of about $30 million—nearly four times what the R.N.C. had in its coffers.
Meanwhile, Rove and Gillespie put Crossroads in a network with four other groups—the American Action Network, the American Action Forum, Resurgent Republic, and the Republican State Leadership Committee—as part of an immense fund-raising and advertising machine, separate from the Republican National Committee, to win back both Congress and the White House. Altogether, according to the National Journal, American Crossroads and Crossroads GPS planned to spend $300 million to help scores of G.O.P. congressional candidates, especially in battleground states such as Florida, Colorado, Nevada, Ohio, and Pennsylvania. That was enough money to produce anti-Democratic attack ads that could run thousands of times, and to produce tens of millions of negative mail pieces and automated phone calls. Under the new laws, all of this could take place with virtually no oversight. It was implicit that the 2010 midterms were merely a dress rehearsal for the larger political goal of the 2012 presidential election, in which these same men would try to topple President Obama with a war chest that now approaches $1 billion. By contrast, John McCain spent $370 million on his entire presidential campaign.
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Rove and Gillespie pitched American Crossroads as an analogue to opposing groups such as Democracy Alliance or labor unions, which had historically supported Democrats. “Where they have a chess piece on the board, we need a chess piece on the board,” said Gillespie, who has been involved in all five groups in roles ranging from board member to informal adviser.
But in fact, much more than that, American Crossroads was an alternative to the R.N.C., which had crumbled under the leadership of Michael Steele, who would leave the committee a few months after the 2010 midterms. “Karl set up a parallel organization,” says longtime G.O.P. political strategist Roger Stone. “The center of energy will always be where the money is. Karl is playing for control of the party. That’s where the power and the money is.”
WABC Radio talk-show host John Batchelor, a Republican, put it in perspective. “America is a two-party state,” he says. “There are the Democrats. Then, there’s Karl Rove.”
As the November 2, 2010, elections approached, Karl Rove had nearly completed a remarkable transformation. His political apparatus was fully funded and operational. His relationships with Fox News and The Wall Street Journal gave him a bully pulpit that allowed him to offer his own Rovian narrative at the same time as he manipulated events behind the scenes. Even Rove’s most astute observers, with few exceptions, had made one crucial miscalculation: given Rove’s close relationship with George W. Bush, they had assumed Rove’s mission to achieve a permanent Republican majority was a goal that had to be accomplished during the two George W. Bush terms. But he had always played the long game. Now America would find out if Karl Christian Rove could pull it off.
The Buyout
Tall and slender at 65, Mitt Romney has always looked presidential. With his chiseled jaw and helmet of charcoal hair flecked with gray, he is almost Reaganesque but has a stiffness in his bearing—an inescapable sense of detachment, the absence of the common touch.
Indeed, the Romney critique that stung most, especially in the context of high unemployment, was Mike Huckabee’s 2008 quip that, far from being the common man, Romney looks like “the guy who laid you off.” All of which raised questions about Romney’s wealth, how he earned it, and how that would play with the American electorate.
At Bain Capital, the Boston-based private-equity firm where he made his name, Romney had mastered the art of the leveraged buyout: making an offer for a company, putting down a fraction of the sale price, financing the rest, taking over the company, and then, after the company turned around, cashing out—often at a huge profit. His success was undeniable. Romney had done it again and again—with a medical-equipment company, with a credit-services company, with Domino’s Pizza. There were firms that succeeded as well as those that failed, costing workers their jobs while Bain took the profits. He had even saved his former consulting firm, Bain & Company, from bankruptcy. Over the years, he earned a personal fortune of more than $200 million. Given the sputtering state of the economy, the question was whether Romney would be seen as someone whose fiscal prowess could cure America’s economic ills. Or would he be seen as a remorseless corporate raider who took home millions while rapaciously cutting jobs?
Then, in the spring of 2012, after Super Tuesday, as the focus of his campaign shifted from his G.O.P. challengers to beating President Obama in November, Mitt Romney unwittingly became involved in what was likely his last leveraged buyout. This time around, the money put down—about $1 billion—was huge and the stakes were astronomically high. This was a highly leveraged buyout in which the targeted acquisition would end up overseeing an annual budget of several trillion dollars.
The parties involved were unusual as well. The buyer was the Republican establishment, led by Karl Rove. The deal was to be funded by the super-pacs Rove had created. The final twist: the acquisition was Mitt Romney himself.
Unlike a normal buyout, there was no formal signing of documents. But on April 5, Ed Gillespie left American Crossroads and joined the Romney campaign as a senior adviser. Technically, Romney had not yet locked up the nomination, but, as Politico reported, Gillespie would serve as a strategist “without portfolio to the likely GOP presidential nominee, offering counsel on planning for the Tampa convention, the candidate’s message and a general election strategy for a campaign.”
Romney’s training and experience as a businessman lent itself to the idea of politics as being merely a question of solving managerial problems, of finding the right business plan and the right personnel. By doing so, he was acquiring funding for a presidential campaign, a strategic plan to win the White House, and an experienced management team to implement it. “I am pleased that Ed is joining my team,” Romney said in a statement. “He brings a wealth of experience that will prove invaluable in the political battle that lies ahead. Barack Obama is building a $1 billion campaign war machine, and Ed will play an important role in countering it.”
What was unsaid, however, was more important. Gillespie had been Rove’s trusted ally for years—at the R.N.C., on George W. Bush’s campaigns, in the Bush White House, and, most recently, as Rove’s partner in forming American Crossroads. Gillespie would not have made the move unless the nomination was in the bag. All of which meant that, through Gillespie, Rove now had strategic oversight of Romney’s campaign.
Rove was replicating what he had done in Texas in the 80s and 90s; there he’d started out with political-action committees through which he could obviate the party structure. “He had a lot of influence over the money,” recalled Wayne Slater, who covered Rove for The Dallas Morning News and co-wrote three books on him. “Over who would contribute to whom. So he became the gatekeeper. When Karl put his imprimatur on you, it was clear that the money was going to go to you.”
Now Rove was attempting to do the same thing at the highest level of all, in the battle for the presidency of the United States.
‘The only way Romney can get back into the race quickly will be through the expenditure of substantial Super PAC dollars,” political strategist Doug Schoen wrote in Forbes, explaining how Romney’s weakness rendered him a tempting takeover target. “Specifically, the key actors in this process will be Karl Rove, whose Super PAC American Crossroads has raised $200 million, as well as the pro-Romney Super PAC, Restore Our Future But make no mistake about it—the 2012 campaign now is not Obama vs. Romney. It is Obama vs. Karl Rove, American Crossroads, and Restore Our Future.”
Officially, in joining Romney, Gillespie had cut ties with American Crossroads because of restrictions prohibiting “coordination” between super-pacs and specific candidates. “Super-pacs have to be entirely separate from a campaign and a candidate,” Romney said. “I’m not allowed to communicate with a super-pac in any way, shape, or form. If we coordinate in any way whatsoever, we go to the Big House.”
But in reality, such constraints are literally a joke—fodder for satirists Jon Stewart and Stephen Colbert, who set up their own super-pac to call attention to a “loopchasm” in the law, namely, that candidates could speak out as citizens publicly—on television, on the Internet, in the press—and make their needs and desires known. “I can’t tell you,” Colbert explained to Stewart, “but I can tell everyone through television. And if you happen to be watching, well, I can’t prevent that, Jon.”
And so the great consolidation began between Rove’s super-pacs and Romney’s operation. When the Republican primaries had been unresolved, talent and money had been divided among the many disparate G.O.P. contenders; now it would all serve the same end of electing Mitt Romney as president and helping other Republicans take over the Senate and retain the House.
Meanwhile, more of Rove’s surrogates took over the command posts of the Romney operation to ensure professional management of the campaign. Some key pieces of the puzzle were already in place. Romney’s chief of staff when he was governor of Massachusetts and his campaign manager for his 2008 presidential bid, Beth Myers, was so close to her boss that The Washington Post deemed her his “office wife.” She had also been a loyal protégée of Rove’s when the two of them worked on the Reagan-Bush campaign in Texas in 1980.
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“She and Karl still remain friends,” Doug Gross, who was Romney’s campaign chairman in Iowa in 2000, told Reuters. “Karl has been through these wars and can provide her with sound advice.” On April 16, Romney announced that Myers would be in charge of the selection process to choose his running mate.
Another powerful but low-profile figure was Carl Forti, a Rove acolyte who had been Romney’s political director in 2008 and now occupied key positions in both American Crossroads and Restore Our Future. Having managed an $80 million budget for the National Republican Congressional Committee in 2006, at the time the G.O.P.’s largest-ever independent-expenditure campaign, Forti had the ideal credentials for the post—Citizens United era, in which super-pacs play an even bigger role than the party itself.
Operating very much under the radar, Forti, known as “Karl Rove’s Karl Rove,” was “a strategic political warrior,” as G.O.P. operative Bradley Blakeman told Politico, whose knowledge of issues, polling, and how to implement complicated strategies made him “the Alexander the Great of the Republican independent-expenditure world.”
Stuart Stevens, a veteran media consultant who had worked with Rove on George W. Bush’s campaigns, had taken over the job of chief strategist for Romney. And former Mississippi governor Haley Barbour, Stevens’s longtime friend and an immensely powerful former head of the R.N.C., joined with American Crossroads in September 2011. Representative Tom Cole, a former R.N.C. chief of staff, described Barbour as “without peer when he is raising money.” His presence ensured a substantial and positive impact on the bottom line. Meanwhile, in the spring of 2012, Barbour’s nephew, Austin Barbour, moved from Mississippi to Boston to become Stevens’s deputy.
The Team of Rivals
A protracted battle against Rick Santorum and Newt Gingrich during the primaries had left Romney significantly behind Barack Obama both in fund-raising and in building ground operations in key battleground states. Now, with Rove’s colleagues in place, they began to steward a disparate group of multi-millionaires, billionaires, and super-pacs, many of which had recently backed insurgent Republican candidates, into tight ranks behind Romney.
On April 10, Foster Friess, the retired investor who had backed Rick Santorum, announced he was supporting Romney. When asked by Politico if he’d be donating to American Crossroads, Friess seemed bewildered by the array of new super-pacs. “I’m not sure if I have already,” he replied. “I know that I have contributed to some other groups, but I can’t remember which ones. There are so many of them. They’re all over the place.”
Next came Sheldon Adelson, the seventh-richest man in America with a $24.9 billion fortune, who, along with his family, according to the Las Vegas Sun, had given $21.5 million to a super-pac backing Gingrich. As recently as March, Adelson had expressed reservations about Romney. “He’s not the bold decision-maker like Newt Gingrich is. Every time I talk to him, he says, ‘Well, let me think about it,’ ” Adelson told JewishJournal.com.
In April, the Sun reported, Adelson was openly expressing “gushing admiration for Karl Rove.” “I’m going to give one more small donation—you might not think it’s that small—to a SuperPAC,” he said. On June 13, that “small” donation was announced: $10 million to Restore Our Future. “He is going to be the Republican Party’s 800-pound gorilla in defeating Barack Obama,” one of Adelson’s friends told CNN.
But the big questions still remained: What about David and Charles Koch, the multi-billionaire brothers responsible for funding much of the Tea Party movement? Would they align with Rove? The Kochs were so powerful that, far from being part of his machine, they had, at times, seemed to be rivals, battling him for the heart of the party. But by early spring, according to Politico, Koch operative Marc Short had begun attending the Weaver Terrace group’s gatherings.
Initially, the Koch brothers had reportedly planned to steer roughly $200 million to conservative groups and causes in 2012, but over the spring they had doubled their 2012 fund-raising target to nearly $400 million, and, according to a report by Peter Stone in the Huffington Post, they strategized about how to put it all together by inviting a few dozen wealthy conservatives to a conference they organized at the PGA National Resort & Spa in Palm Beach one weekend. Former George W. Bush consultant Mark McKinnon put the $400 million figure in context with a tweet: “Think the $$ political system is screwed up? Koch brothers alone are planning to spend more $$ than McCain’s entire 2008 presidential budget.”
The new strategy the Kochs developed was one that mirrored what Rove had already begun to implement with Crossroads GPS. Rather than funnel everything through their Americans for Prosperity, the Kochs decided to distribute tens of millions of dollars to a diverse network of conservative organizations, including the National Rifle Association, Grover Norquist’s Americans for Tax Reform, the National Right to Life committee, Ralph Reed’s Faith & Freedom Coalition, and the American Future Fund. “By spreading their wealth throughout the conservative ecosystem,” wrote Peter Stone, “the Kochs can exploit trusted brands with passionate followings that reach beyond the Tea Party base,” while at the same time leaving no fingerprints.
The N.R.A. launched a “Trigger the Vote” campaign to reach millions of gun owners who had not yet registered to vote. Thanks to $30 million in donations, much of it from out of state, Wisconsin governor Scott Walker, a Koch-brothers favorite (although they say they didn’t contribute to Walker’s campaign directly), outspent Democratic foe Tom Barrett eight to one, and, on June 5, became the first governor in history to win a recall battle. Millions were earmarked for 10 battleground states, especially Florida, Ohio, and Virginia, as well as key Senate races to help the Republicans regain the upper house.
But the Koch brothers were not the only ones on the right to raise their sights, and by the end of May, Rove’s super-pac network, along with the Koch brothers and the U.S. Chamber of Commerce, had a new target, according to Politico: $1 billion.
This $1 billion was in addition to funds brought in by the Romney campaign and the Republican National Committee, which intended to raise another $800 million, giving Romney a total of $1.8 billion.
The Game Plan
Rove’s eyes were on more than simply capturing the White House. He wanted to keep the House of Representatives and win back the Senate as well. As early as November 2011, a full year before the election, Rove’s Crossroads GPS group began airing attack ads targeting Democrats across the country: Elizabeth Warren in Massachusetts; Tim Kaine in Virginia; Senator Claire McCaskill in Missouri; Senator Ben Nelson in Nebraska; Senator Jon Tester in Montana. “Instead of focusing on jobs, Elizabeth Warren sides with extreme-left protests,” one ad said. “At Occupy Wall Street, protesters attack police, do drugs, and trash public parks!”
Similarly, a U.S. Chamber of Commerce ad campaign against Senator Sherrod Brown of Ohio asked if he was “hiding from his tax-raising, job-killing record” and portrayed the 59-year-old Democrat as looking exceptionally haggard and disheveled thanks to a scraggly beard that was allegedly Photoshopped onto his likeness.
More to the point, thanks to Rove’s groups, Senator Brown and Tim Kaine, the former Virginia governor who was running for the Senate, were being outspent by more than three to one. On Kaine’s behalf, as of late May, 380 ads had been run; in comparison, Bloomberg Businessweek reported, Crossroads GPS and the Chamber of Commerce had aired 1,980 attack ads against him.
And thanks to his friends at Fox News, when it came to national ads attacking Obama, Rove could get enormous amounts of free extra mileage for his advertising dollar. On April 26, American Crossroads released an ad attacking Obama as a “celebrity president.” The next day, according to Media Matters, the progressive watchdog site, Republican strategist Brad Blakeman went on Fox to proclaim the ad a huge success because “Karl has gotten more earned media than the amount he invested in the ad.”
But that was largely because Fox News promoted it on no fewer than seven separate news shows in a 24-hour period.
The Citizens United ruling gave Democrats the same latitude to raise money from billionaires, but, thanks to a souring of relations between the White House and big banks, Wall Street had effectively deserted Obama. Moreover, having criticized the Citizens United decision, the Democrats did not have the stomach to play by the new rules by calling on the wealthiest Democrats to meet Rove’s challenge.
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“The inability of Democrats to play in the same league as Karl Rove financially is a humiliating debacle that might be unprecedented, measured by comparing wealthy donors of one party to wealthy donors of the other, in the history of presidential politics,” wrote Brent Budowsky in The Hill. “The president and Democrats seem befuddled by how to react to the Citizens United decision, while Karl Rove understands with crystal clarity. Rove mobilizes his army, rallies his wealthy, organizes his venture and puts his money in the bank.”
In contrast, in late spring, the Democratic Party sent an e-mail to its constituents signed by Barack Obama. In the subject line, it said, “Hey.” The text read, “I need your help today Please donate $3 or more before midnight Thank you, Barack.”
But the response to Obama’s entreaty, initially at least, was weak. In 2008, more than 550,000 people gave more than $200 to Obama and in so doing created the longest list of individual donors in American politics. But according to BuzzFeed’s Ben Smith and Rebecca Elliott, at the same point in 2012, nearly 90 percent of those people had not come back to donate that amount again.
Likewise, according to Politico, compared with their G.O.P. counterparts, the Democratic super-pacs were feeble. By mid-April, four of the biggest Democratic super-pacs and two allied nonprofits had a mere $8.3 million on hand, thanks in part to $1 million each from the party’s two largest contributors to date, comedian Bill Maher and hedge-fund billionaire James H. Simons, while the Republican ad barrage continued apace against congressional Democrats and Obama, especially in the battleground states of Ohio, Pennsylvania, and Virginia. By mid-April, Rove’s groups alone had already spent more than $11 million on ads against Obama.
Finally, after months on the sidelines, major liberal donors, led by financier George Soros, put together a strategy of sorts to combat Rove’s onslaught, preparing to invest $100 million in Democratic super-pacs and nonprofits by focusing on grassroots organizing, voter registration, and turnout instead of negative advertising.
“Culturally, the left doesn’t do Swift Boat,” Soros adviser Michael Vachon told the Huffington Post. “It’s not what we do well.”
The Boss
In late April, Rove’s electoral map had forecast an Obama victory, but in his May 24 Wall Street Journal column, “Romney’s Roads to the White House,” Rove took another look at what might happen on the first Tuesday in November.
Mapping out a “3-2-1” strategy for Romney, Rove itemized what was necessary for Romney to win. All he had to do was take three states—Indiana, North Carolina, and Virginia—that John McCain had narrowly lost in 2008; recapture two big battleground states that Bush had won in 2004, Florida and Ohio; and, finally, win one, just one, additional state in the union, anywhere. It was more than just possible, Rove concluded. Now it was probable. “Mr. Obama long ago lost his chance to duplicate his 2008 performance,” he wrote. “He’s now forced to fight for states he easily won in 2008. The odds now narrowly favor a Romney win.”
A week later, Rove further hinted that an effective line of attack would be to paint Obama as a weak, ineffective leader, especially in terms of the economy, a hostage to events rather than a master of them. “When asked ‘Which candidate do you trust to do a better job handling the economy?’ Mr. Romney polls as high or higher than Mr. Obama,” Rove wrote. “The self-portrait the president has painted is of a weak liberal, buffeted by events. That will make this election more like 1980—when Ronald Reagan defeated an ineffectual Jimmy Carter—than 2004.”
There are still three months to go before the election. That’s an eternity in politics, of course, and it remains to be seen whether global events will conspire to aid Rove’s cause. On June 1, in the wake of weak numbers on the jobs front, and fears of an economic collapse in the Eurozone, the stock market tanked. In response, the Rasmussen tracking poll gave Romney a four-point lead. Five weeks later, on July 10, Rasmussen, which has a history of leaning toward the Republicans, still gave Romney a three-point lead, while Gallup and ABC News/Washington Post called it dead even. The race for the White House was a toss-up.
Whatever the outcome of the elections, Rove had come a long way. Just a few years earlier, as a brand in politics, his name had been toxic. He had been the brain behind one of the worst presidents in U.S. history, who had started two horribly costly wars and, having inherited a booming economy, left the nation near economic collapse.
It remains to be seen whether Romney will actually win, and, if so, whether he will be as pliant as Rove hopes. Likewise, it’s too early to say whether Rove really will build his permanent Republican majority.
Regardless of the answers, on some level, Rove has already won. Undeniably, he’s back. He has re-invented himself. He is not merely Bush’s Brain; he’s the man who swallowed the Republican Party. As the maestro orchestrating the various super-pacs, he has inspired the wealthiest people on the right to pony up what could amount to $1 billion and has created an unelected position for himself of real enduring power with no term limits.
Rival operatives in the party who loathe him nonetheless evince a grudging respect. “He’s playing a very long game,” says Roger Stone. “Even if Romney loses, that’s good for Karl, because he will still be in control. And there’s always Jeb Bush in 2016.”
With the Koch brothers and Adelson falling into rank, Rove had consolidated the warring factions within the party. He is in command, having built his shadow R.N.C. into an entity over which he has complete control.
Proving the Yeatsian verities about the best lacking all conviction and the worst being full of passionate intensity, Rove has created a ruthlessly efficient political operation outside of the party structure beholden to no one but himself. Says Roger Stone, “No one else can construct a power center like he can.”
In a setback for those trying to curb the secrecy behind election year 'issue ads' funded by shadowy special interests groups, the DC Circuit Court today overturned a lower federal court’s ruling which made public disclosure of such spending a statutory requirement.
The earlier decision, in the case Van Hollen v. Federal Election Commission, stipulated that nonprofit 501(c)(4) organizations like Americans for Prosperity and Karl Rove's Crossroads GPS as well as 501(c)(6) associations like the Chamber of Commerce and the American Petroleum Institute would have to disclose their donors.
The 3-judge panel today said the previous judge was wrong when he determined that the McCain-Feingold campaign finance bill intended for more complete financial disclosure from such groups and argued that because of the Supreme's Court decision in Citizens United vs. FEC, the judge should review and reevaluate his decision.
"This decision dooms voters’ last chance of finding out who is intent on pumping millions of dollars into the elections. With 49 days to go, there’s still no sheriff in town, it’s the wild, wild west." —Bob Edgar, Common Cause
US Congressman Christopher Van Hollen (D-MD), who filed suit in the original case, issued a statement saying the DC Circuit Court's decision “struck a blow against transparency in the funding of political campaigns and reinstated the flawed regulation that rendered the disclosure requirements meaningless – made clear by the fact that millions of dollars of special interest money has flooded the airwaves with ads from anonymous sources.”
The court's action, he added, "will keep the American people, for the time being, in the dark about who is attempting to influence their vote with secret money.”
Disclosure and campaign finance reform advocates also slammed the decision.
“Today’s decision by the D.C. Circuit Court overturned one of the few glimmers of hope in campaign finance disclosure law,” said Melanie Sloan, executive director for Citizens for Responsibility and Ethics in Washington. “Voters are being pummeled by campaign ads with no way to discover who is really trying to influence our elections.”
Bob Edgar, president of Common Cause, said that big-money and corporate interests—who are spending millions to influence the outcome of the elections—were busy celebrating the decision, but that the "big loser" in the decision was the American people.
“This decision dooms voters’ last chance of finding out who is intent on pumping millions of dollars into the elections. With 49 days to go, there’s still no sheriff in town, it’s the wild, wild west," he said.
“People and companies making six- and seven-figure investments in candidates and causes will want something in return for their money," said Edgar, acknowledging that this creates inevitable incentives to serve their interests. "That’s why disclosure is so important; before we go to the polls, voters should know to whom the candidates we choose will be beholden."
Campaign finance reform advocates said they were not giving up, saying they still believed they had a strong argument to make at the district court level if the FEC chooses to defend the current rules.
“The Court of Appeals got it wrong,” said Fred Wertheimer, president of Democracy 21. “There is no way Congress enacted a statute to result in no disclosure of contributors when the statute calls for all disclosure of contributors.”
Wertheimer said his group would also continue to press the Internal Revenue Service to scrutinize the activities of groups such as Crossroads GPS that claim to be nonprofit social welfare organizations.
But he admitted that in the prospect of forcing such organizations to reveal their donors this year has been effectively shut down.
“They’ll go back to doing electioneering and claim that their campaign ads are not campaign ads,” Wertheimer said.
The real story told by the Forbes 400 is about privilege and the growing inequality in both wealth and opportunity
Gushing over the wild financial wealth of individuals, The Forbes 400: The Richest People In America In 2012 — released today online and heading to newstands nationwide—pays homage to the clichéd platitude that America is the land of opportunity for hard-working, gutsy entrepreneurs and great wealth is merely evidence of great accomplishment.
Unfortunately, according to a new report by Massachusetts-based United for a Fair Economy, the Forbes 400 does not tell the whole story of wealth in America. In fact, the authors of the report argue, the list of the country's richest people tells the story of a nation where being born into wealth or inheriting great sums from a departed spouse are by far the most common paths to financial fortune.
Taking a close look at last year's list of wealthiest people, the UFE discovered that roughly 40% of the individuals who appeared on the 2011 Forbes list received a "significant economic advantage in their lives by inheriting a sizeable asset from a spouse or family member." Strikingly, more than 20% received sufficient wealth to make the list from this inheritance alone.
"Each story calculatedly glamorizes the myth of the 'self-made man' while minimizing the many other factors that enable wealth, such as tax policies, other government policies that favor the wealthy, and the importance of being born to the right family, gender and race."
Forbes claims that their list of the 400 richest people is 'the definitive scorecard of wealth' in the United States, but UFE rebuffs that assertion, saying that the narrative of wealth and achievement pushed by Forbes ignores the other side of the coin— namely, that the opportunity to build wealth is not equally or broadly shared in contempory society.
According to the report:
The net worth of the Forbes 400 grew fifteen-fold between the launch of the list in 1982 and 2011, while wealth stagnated for the average U.S. household.
The racial wealth divide is starkly apparent from the overwhelming whiteness of the list. The 2011 Forbes 400 had only one African American member.
Women accounted for just 10% of the 2011 list, and of the women on the list nearly 90% inherited their fortunes.
In addition, the report points out that (and the new 2012 list from Forbesshows continuation of this trend) the rich in 2011 got richer as the poor got poorer. The growing wealth inequality, the report says, is not due to any inherent brilliance or dynamism of the wealthy, but because of carefully crafted policy and legislative reforms enacted by government at the behest of the these same individuals.
Two examples cited by the report which directly impact the ability of the rich to retain and pass along their enormous assets:
Tax rates on capital gains have been slashed, which especially benefits members of the Forbes list. The richest 0.1% receive half of all net increases in capital gains.
Drastic cuts to the federal estate tax passed in the Bush tax cuts and the 2010 Obama tax deal allow the Forbes 400 to pass on more of their massive fortunes to their heirs, contributing to the growth of inequality and entrenching a class of super-wealthy heirs.
For its part, and despite the critical tone of the report, United for a Fair Economy says its efforts are not an attempt to "shame or belittle wealth or success."
"Instead," the authors maintain, "we aim to ask why certain representative individuals are on the list in order to reach a better understanding of wealth in the US. Such questions should lead to an important conversation about economic mobility, as well as the rules and loopholes that allow people to create wealth in the first place."
Although it’s been bubbling in the bowels of the right-wing slime-o-sphere for quite some time, the attack on President Obama as a “Kenyan anti-colonialist” (really, just a junior college way of calling him a “mau-mau”) is coming to a boil in time for the election. On Tuesday night’s The Young Turks, Buzzfeed‘s Michael Hastings slammed author Dinesh D’Souza, whose The Roots Of Obama’s Rage is the basis for the upcoming hackumentary 2016: Obama’s America.
The film, allegedly coming to theaters in August, is partially financed by TD Ameritrade billionaire Joe Ricketts, who infamously commissioned a strategy memo that sought to launch a race-based attack on the President by resurrecting the Rev. Jeremiah Wright story.
After a chummy introduction that included the re-dubbing of Hastings as “The Notebook” (I just call him “the Rolling Stone guy with the General), host Cenk Uygur cut right to the chase, mostly, observing that “D’Souza thinks he’s going to go get Obama and prove he’s an angry black man. Except Obama appears to be the least angry person in America–I wish he’d get angry every once in a while.”
Hastings said, of D’Souza, “He’s a hack, but he’s a bestselling hack, so I’ll give him that,” adding that “he lives in a fantasy world. If you look at his work, this is a guy who blames Hollywood for September 11th, wrote a book saying why there is heaven…there are these sorts of things that he pushes.”
“So he comes along and wants to push this narrative that President Obama is obsessed with this idea of being anti-colonial,” Hastings continued, “and that somehow has shaped our world view, which will somehow lead us to this socialist dictatorship in 2016. That’s the kind of level we’re dealing with, but as you said, Obama is not an angry guy and his half brother, George, comes across quite well. He seems pretty cool. He doesn’t seem very upset by the whole situation.”
He later concludes that “what Dinesh D’Souza is tapping into, and this is very real, is that there is such hatred for President Obama–a lot of it centers around his race–a lot of it centers around his background–we see it with the birther controversy– that there’s essentially there’s this alternative narrative that the right has built up against President Obama that will not change no matter how many facts or how many different arguments you put in front of it.”
Hastings is being generous, of course. The genesis of the Birther conspiracy, and all of the many forms of this Kenya attack, is racial resentment, and a cynical attempt to harness it. What’s sick is how it has penetrated every level of the conservative stratosphere, from the low-flying likes of Matt Drudge and the Breitbart.com “Big” sites, on up to mainstream Republican Party presidential candidates like Newt Gingrich and Mike Huckabee(and former frontrunning jokes like Donald Trump).
It’s a simple message, and one that serves only one political purpose: to turn out the angry white vote. They needn’t have gone to the trouble, though, since these folks would turn out for an Alda/Garofalo ticket if it meant defeating Barack Obama and taking back the country for Whitekind. As a side-bonus, though, it’s good for business, if you like that kind of business.
Nobody's really talking about this slice of the pie, but Mitt Romney's "47%" who pay no federal income tax include several thousand of the highest-income households in the country.
The Tax Policy Center estimates that 4,000 households with incomes over $1 million ended up with zero federal income tax liability in 2011. Another 14,000 made between $500,000 and $1 million.
Combined, those households represented just 0.025% of the more than 76 million who did not pay.
But their presence in the No Tax Club underlines the fact that the tax code is chock full of tax breaks and exceptions benefiting people up and down the income scale.
There are various reasons why a household booking more than $1 million in income could owe nothing in federal income tax, experts note.
Among them, people who live off their investment income and report large investment losses in a given year may be able to offset the taxes owed on their investment gains.
Or they may have gotten a lot of their income from tax-free investments, such as municipal bonds.
Another possibility: a wealthy tax filer may report a lot of dividend income from foreign stocks on which he already paid tax to a foreign government. He would get a foreign tax credit on his U.S. return, to avoid double taxation. And if his foreign tax bill tops his U.S. tax bill, he wouldn't owe anything to the IRS on that dividend income.
Add in some charitable contributions and other tax breaks to any of these scenarios, and a tax filer could whittle down down his federal income tax bill to zip.
It's impossible to say how many households -- rich and otherwise -- would end up with zero federal income tax liability under Romney's tax reform proposals. There are still too many unknowns -- such as which tax breaks he'd be willing to curb to pay for his proposed tax rate reductions.
But it's a fair bet there will still be a notable number. The percent of non-payers fluctuates from year to year, but there has not been one year since 1916 in which there were no non-payers, according to the Tax Foundation.
Among the returns filed -- which excludes people who didn't have to file because their income was too low -- non-payers have ranged from a low of 7.5% in 1943 to a high of 56.1% in 1934. Since 2000, the group of non-payers has grown to more than 40% from 25%
A prominent Republican billionaire is bankrolling a new advertising campaign through the super-PAC he funds.
Joe Ricketts, the founder of TD Ameritrade Inc. and owner of the Chicago Cubs, is spending a total of $12 million on advertising supporting Mitt Romney and congressional Republican races, The Wall Street Journalreported Monday.
Ricketts will fund the advertising blitz through his super-PAC, the Ending Spending Action Fund.
The ads begin airing this week, according to the newspaper.
Ricketts was the center of the political spotlight in May after The New York Times reported that he was considering funding a provocative advertising campaign that would tie President Obama to controversial sermons by the Rev. Jeremiah Wright.
"The world is about to see Jeremiah Wright and understand his influence on Barack Obama for the first time in a big, attention-arresting way," the proposal said, according to the Times report.
The ad proposal appeared to create a rift between Ricketts and Chicago Mayor Rahm Emanuel, Obama's former chief of staff. Negotiations between Emanuel and Ricketts over tax breaks to help renovate Wrigley Field, where the Cubs play, halted after news broke about the ad campaign.
Ricketts rejected the ad campaign shortly after the proposal became public.
International commission warns of growing influence of money in politics and attempts to suppress voter turnout.
An international commission led by former UN chief Kofi Annan warns that the world's democracies, and the United States specifically, are being corrupted by the increasingly strong role of "uncontrolled, undisclosed, illegal and opaque" financing of political campaigns.
The report by the commission, staffed with former world leaders and Nobel prize laureates, stipulated that powerful financial institutions and the surging influence of money in politics was harmful to both emerging and more developed democracies across the globe. "The rise uncontrolled political finance," warned the report, "threatens to hollow out democracy everywhere and rob democracy of its unique strengths".
The Global Commission on Elections, Democracy and Security is presenting its finding today in London.
Regarding elections in the US, the commission's report, Deepening Democracy: a Strategy for Improving the Integrity of Elections Worldwide,took special issue with the Supreme Court's ruling in the Citizens United case.
Citizens United has "undermined political equality, weakened transparency of the electoral process and shaken citizen confidence in America's political institutions and elections", the report said.
According to the Guardian, the report criticizes individual states "which have sought to introduce voter identification laws and other measures that have the effect of suppressing African American participation in the political process."
And the Guardian adds:
Vidar Helgessen, secretary general of International Institute for Democracy and Electoral Assistance, said that US system was cited as just one example of flaws in democracies worldwide. But, he said the US, as the most powerful nation in the world, had a responsibility to set an example.
"If a vast majority of citizens say the systems is undermining political equality and weakening transparency of the electoral process, then there is an issue of trust in the government," he said.
Political finance was an important issue which had not received the attention and reform it deserved, he said.
"We are seeing increasing inequality and we are in a global economic recession and it is an issue that will only grow. It is not only in new and emerging democracies that provide challenges and have elections that lack integrity"
The report cited a national survey this year by the Brennan Center for Justice at New York University law school, which found a majority of people believe nominally independent Super Pacs to be a danger to democracy.
"Nearly two-thirds of Americans said that they trust government less because big donors have more influence over election officials than average Americans," the report said.
It concluded that, although Super Pacs must disclose their contributors and may not coordinate directly with candidates by law, in practice, "both constraints have been flouted".
The report, again with a global perspective, provides a comprehensive series of recommendations to strengthen electoral processes and norms in all nations. Specific measures include:
National Electoral Management Bodies (EMBs) should create a global certification process to evaluate and grade EMBs on their professionalism, independence and competence, including a code of conduct
Urgent attention must be given to address the growing threat to democracy posed by financing of political campaigns, parties and candidates by transnational organised crime
Domestic election observers should commit to global standards through the Global Network of Domestic Election Monitors
A new transnational civil society organization - "Electoral Integrity International" - should be created to bring global attention to countries that succeed or fail in organizing elections with integrity
Governments and donors need to prioritise funding and political engagement throughout the entire electoral cycle of countries with problematic elections, supporting necessary dialogue and citizen participation as well as technical improvements
Regional organisations must create and communicate "red lines" of egregious electoral malpractice that would trigger immediate multilateral condemnation and sanction if crossed
An analysis from the New York Times published Friday shows that fossil fuel industry has been pumping millions into television ads to defeat President Obama.
Eric Lipton and Clifford Krauss write in their report that $153 million has been spent this year on television ads that promote fossil fuels or criticize renewables, nearly four times the $41 million spent promoting renewables or praising President Obama's energy plans.
"This year’s campaign on behalf of fossil fuels includes a surge in political contributions to Mitt Romney, attack ads questioning Mr. Obama’s clean-energy agenda, and television spots that are not overtly partisan but criticize administration actions like new air pollution rules and the delay of the Keystone XL oil pipeline from Canada," report Lipton and Krauss.
The American Petroleum Institute has been the top energy spender, the Times reports, having spent $37 million so far on television ads.
The spending is in sharp contrast to that of 2008, when "green ads greatly outnumbered those for fossil fuels, $152 million to $109 million."
Census numbers show persistent poverty, falling wages, and rising inequality.
The latest US Census Bureau numbers on poverty, income inequality, and healthcare, coupled with newly released economic analysis of US public policy reveals the reality and the reasons behind the persistent rut of the poverty-stricken, the working-poor, and the middle class in America.
More than three years after the collapse of the housing bubble, the federal government's bailout of Wall Street, and the start of the Great Recession, the US poverty rate remains persistently high with nearly 1 in 5 Americans living at or below the poverty line, according to new figures released on Wednesday by the US Census Bureau
In addition, the numbers show rampant joblessness, stagnant or falling wages among workers, household incomes that continue to fall, and an inequality gap that continues to grow.
Meanwhile, the Economic Policy Institute released their annual review of US economic policy which includes a wide variety of data on family incomes, wages, jobs, unemployment, wealth, and poverty that allow for a clear, unbiased understanding of the economy’s effect on the living standards of working Americans.
As the Census reports, "the nation's official poverty rate in 2011 was 15.0 percent, with 46.2 million people in poverty. After three consecutive years of increases, neither the poverty rate nor the number of people in poverty were statistically different from the 2010 estimates."
New data on the continued rise in inequality—where income inequality increased by 1.6 percent between 2010 and 2011—prompted Robert Greenstein, President of the Center on Budget and Policy Priorities, to underscore that the nation's wealthiest should begin to share in the sacrifices that will be needed to correct the economy in the coming years.
"Given the need for substantial sacrifice and the skewing of income gains to those at the top," he said in a statement, "it is difficult to justify extending the rather lavish tax cuts for high-income individuals that policymakers enacted in 2001 and 2003, which average $129,000 a year for people who make over $1 million a year, according to the Urban-Brookings Tax Policy Center."
The Economic Policy Institute, which on Tuesday released its 12th annual "State of Working America" report, listed the key numbers from the Census report:
Poverty
15.0%: The share of the population in poverty in 2011
21.9%: The percent of children under 18 in poverty
46.2 million: The number of people in poverty in 2011
$22,811: The poverty threshold for a family of four with two children
44.0%: The share of the poor population in “deep poverty,” or below half the poverty line
2.3 million: The number of people unemployment insurance kept out of poverty in 2011
21.4 million: The number of people Social Security kept out of poverty in 2011
5.7 million: How many fewer people would be in poverty if the Federal Earned Income Tax Credit was included in the Census definition of money income
3.9 million: How many fewer people would be in poverty if food stamps (SNAP) were added to money income
Income
-1.7%, +5.1%: The change in average household income between 2010 and 2011 for the middle 20 percent, and the top 5 percent, respectively. The disparity means income inequality increased in 2011.
$7,887, -12.4%: The decline in median working-age household income from 2000 to 2011 in level terms and percentage terms, respectively
$6,518, -16.8%: The decline in median African-American household income from 2000 to 2011 in level terms and percentage terms, respectively
$4,695, -10.8%: The decline in median Hispanic household income from 2000 to 2011 in level terms and percentage terms, respectively
$50,622, $48,202: Median earnings for a man working fulltime, full year in 1973 and 2011, respectively
$28,699, $37,118: Median earnings for a female working fulltime, full year in 1973 and 2011, respectively
Putting the Census numbers in the context of public policy in their new report, EPI explains how economic policies, including policymakers’ actions and failures to act, have continuously undercut the ability of workers to benefit from economic growth in the United States. Its primary findings include:
America’s vast middle class has suffered a “lost decade” and faces the threat of another. The wages of typical Americans, including college graduates, are lower today than they have been in over a decade. Because hourly wages and compensation failed to grow after the 2001 recession, household incomes had declined even before the Great Recession. Furthermore, forecasts of high unemployment for many years ahead suggest that another lost decade for typical American workers and their families, as measured by wages and income, has already begun.
Income and wage inequality have risen sharply over the last 30 years. Income inequality has grown sharply since 1979, a fact that is universally recognized by researchers. The trends that have driven this growing inequality in overall incomes are growing concentration of both capital income (the returns to financial assets) and labor income (wages and benefits), as well as a shift from labor income toward capital income.
Rising inequality is the major cause of wage stagnation for workers and of the failure of low- and middle-income families to appropriately benefit from growth. The typical worker has not benefited from productivity growth since 1979, though there has been sufficient economic growth to provide a substantial across-the-board increase in living standards. Instead, higher earners have reaped a disproportionate share of wage income, and the top one percent of households have received a disproportionate share of all income growth. Aside from the period of strong growth in the late-1990s, wages for low-and middle-wage workers were stagnant from 1979 to 2007, and incomes for lower- and middle-class households grew slowly.
Economic policies caused increased inequality of wages and incomes. Inequality between the very top wage earners and all others grew from 1979 to 2011 except during stock declines, driven by growing executive compensation and an expanded and increasingly highly-paid financial sector. Inequality between the top wage earners and middle-wage earners also grew from 1979 to 2011. A number of policies played a role in this growth, including those that: (1) targeted rates of unemployment too high to provide reliably tight labor markets for low- and middle-wage workers; (2) hastened global integration of the U.S. economy without protecting U.S. workers; (3) failed to manage destructive international trade imbalances; (4) allowed employer practices hostile to unions to flourish; (5) privatized and deregulated industry, including the financial sector; and (6) eroded labor standards. Inequality between middle-wage earners and the lowest wage earners grew only in the 1980s, fueled by the erosion of the purchasing power of the minimum wage and, again, the targeting of rates of unemployment that were too high. Tax and budget policies have compounded the inequalities that have been generated in market-based, pre-tax incomes.
Claims that growing inequality has not hurt middle-income families are flawed. Some recent studies have suggested that measures of comprehensive income since 1979 show that middle-income families have seen adequate income growth. Rather, incomes for the middle class have not grown as fast as average incomes, and middle-income growth was much slower between 1979 and 2007 than it was between 1947 and 1979. Furthermore, more than half of the income growth between 1979 and 2007 was made up of government transfers, which reflects the strength of programs like Social Security, Medicare and Medicaid, not the strength of the labor market. In fact, higher household labor earnings can be traced to increasing work hours, not higher wages. Finally, the data on comprehensive incomes are technically flawed because they count rapidly rising health expenditures made on behalf of households by employers and the government as income, without taking excessive health care inflation into account.
Growing income inequality has not been offset by increased mobility. There is no evidence that mobility—changes in economic status from one generation to the next—has increased to offset rising inequality, and some research shows a decline.
Inequalities persist by race and gender. Key economic measures, including unemployment, wealth, and poverty (particularly child poverty), continue to show staggering disparities by race and ethnicity. Gender disparities also persist, and while gaps in labor market outcomes have closed in recent decades, a number have done so because men lost ground, not because women gained it.
the components of the Congressional Budget Office’s “comprehensive income” growth for the middle class (health care insurance, wages, pensions, work hours, government benefits)
the growth of capital income by income group and the growing concentration of capital incomes
Mobility
the stagnation of economic mobility
the poor performance of the U.S. economy in international rankings of mobility
Wages
flat or falling wages for college graduates in almost every occupation over the past 10 years
wage trends by education, decile, gender, and race/ethnicity
the growth of wage inequality for the three key wage gaps: between the top one percent and others, between the top and middle (95/50 wage gap), and between the middle and bottom (50/10 wage gap)
the impact of rising health care costs on wage growth and wage inequality
the factors driving the gap between productivity and median hourly compensation growth
the role of the financial sector and CEO compensation in fueling the top one percent’s income growth
Jobs
the extent to which changes in the labor force participation rate are due to the weak economy or are structural/demographic
why current unemployment is cyclical and not structural
Wealth
the decline of median wealth between 1983 and 2010 (while wealth at the top grew strongly)
the collapse of wealth in African American and Hispanic households
the role of housing equity’s collapse on middle class wealth
the increasing concentration of stock ownership
Poverty
the factors driving high poverty and low-end wages
the large role income inequality plays in growing poverty (as opposed to demographic factors like family formation)
the contribution of longer work hours to low-income families’ income
the relatively small role tax and transfer policy plays in reducing poverty in the U.S. in comparison to peer countries
high child poverty rates in comparison to peer countries
The $100 million that billionaire casino mogul Sheldon Adelson pledged to donate to Mitt Romney will turn out to be a good investment if the Republican nominee wins the presidential election in November, a new report from the Center for American Progress Action Fund found. Thanks to Romney’s tax proposals, which call for massive tax cuts for the rich, corporate tax reforms that will encourage the offshoring of profits, and the elimination of certain investment taxes, Adelson could personally save more than $2 billion in taxes, according to CAPAF Director of Fiscal Reform Seth Hanlon.
Romney’s tax plan would help Adelson in the following ways:
• Cut top tax rates, saving Adelson approximately $1.5 million on his annual compensation as chief executive of his casino company.
• Maintain the special low rates on dividends, potentially saving Adelson nearly $120 million on a single year’s worth of dividends, more than enough to recoup his political donations.
• Maintain the special low rates on capital gains, allowing Adelson to make back his political donations in capital gains tax cuts just by selling a fraction of his stock.
• Provide a tax windfall of an estimated $1.2 billion to Adelson’s company, Las Vegas Sands Corp., on untaxed profits from its Asian casinos, as well as a tax exemption for future overseas profits. Adelson’s casinos already enjoy a special foreign tax exemption from the Chinese administrative region of Macau, and Gov. Romney would make those foreign profits exempt from U.S. taxes as well.
• Eliminate the estate tax, potentially providing a staggering $8.9 billion windfall to Adelson’s heirs.
Romney’s corporate tax reforms would also provide Adelson’s casino company approximately $1.2 billion in tax breaks on overseas profits and $565 million from Romney’s proposed shift to a territorial tax system. Adelson’s share of that, the report says, would be upward of $900 million, nine times what he pledged to spend to get Romney to the White House.
While Romney’s tax plan would further enrich billionaires like Adelson, it would have to raise taxes on middle class families by as much as $2,000 if Romney were to keep his plan to maintain current levels of revenue.
America is currently engaged in the most expensive presidential contest in world history. In the United States, money doesn’t just talk – it dictates. How can we hope to make progress on the path to sustainability when the road is blocked by barricades of bullion backed by battalions of billionaires? How do we break through the political gridlock?
Dave Brower’s wife, Anne, once put a wise spin on this dilemma. “What we need,” she said, is “a cure for greedlock.”
Earth’s richest 1,000 individuals now control as much wealth as the poorest 2.5 billion people on the planet. This super elite uses its vast wealth to control the media, influence politicians, and bend laws to their favor. In the US, the wealthy dominate our government: 47 percent of US representatives are millionaires, as are 67 percent of US senators. The Center for Responsive Politics reports Congressional wealth has increased 11 percent between 2009 and 2011.
Not only is our economy out of balance with nature, our economy is also out of balance with the practical limits of physical and fiscal reality. As the Occupy movement has indelibly framed it, we are now a society divided not only by haves and have-nots, but we are a nation – and a world – divided into the 99 percent and the 1 percent.
Imagine if a tree were engineered like the US economy – with half of its mass centered in the top 10 percent of its height and 40 percent of its mass concentrated in the very topmost branches. Whether redwood or oak, such a tree would not be stable in a windstorm. It would be destined to topple. Of course, nature has better sense.
In 2011, the International Forum on Globalization (IFG) published a report called Outing the Oligarchy designed to focus public attention on “the ultra-rich individuals who benefit most from – and are most responsible for – the growing climate chaos that is destabilizing global ecosystems.” It defined them as “a small elite of powerful billionaires who profit from polluting the atmosphere by promoting government policies that support an unsustainable reliance on fossil fuels.”
The IFG report illustrated the growing rich-poor gap by visualizing a parade in which all the residents of Canada ambled down a city street on a single day. Let’s translate that vision to the US.
Imagine if everyone in America was invited to parade down Pennsylvania Avenue in Washington, DC. Imagine if the parade took just one hour. Imagine if the march began with the poorest people in the lead. Imagine if all the marchers’ income levels were indicated by their height. Here’s what such a parade would look like:
For the first 10 minutes, the lead marchers (those who survive on only a few thousands dollars a year) look like toddlers, barely a foot tall. Around 15 minutes into the parade, the marchers are not quite so poor: They now stand about three feet tall. This tide of half-sized adults continues for the next 25 minutes. Only after more than two-thirds of the population has surged down the parade route do we begin to see normal-sized marchers (those making an average income). For the next 10 minutes or so, the spectacle resembles a normal parade. Then things start to get really strange.
In the final 10 minutes, we start to see marchers who are wealthier than average: people who are seven, even eight feet tall. In the last six minutes, the marchers loom more than 14 feet tall. With 25 seconds left, the minority of super-rich marchers looks down from a height of more than 30 feet – nearly six times the size of the average marcher; 30 times the size of those who made up the first quarter of the parade.
In the closing seconds of this parade of wealth, the shoulders of some marchers extend thousands of feet into the sky – these are the plutocrats. Finally, bringing up the rear, in the very last second of the march, are the most powerful and dominant members of the power elite – a select band of Godzilla-like oligarchs who look down upon everyone else from an astonishing altitude of 8,000-plus-feet. No wonder the superrich seem so removed and aloof.
Just like the banking system, when something is “too big to fail” it becomes a danger to itself and others. Nature would never tolerate such a system. Nor should we.
Congressional Republicans and their party’s presidential nominee have both pushed plans to cut taxes on the wealthiest Americans in hopes that such a move would stimulate the economy and aid the recovery from the Great Recession. A new study, however, indicates that tax cuts for the wealthiest earners fail to generate economic growth at the same pace as tax cuts aimed at low- and middle-income earners.
The study, conducted by Owen M. Zidar, a former staff economist on President Obama’s Council of Economic Advisers and a graduate student at California-Berkeley, examined economic growth in the states with the most high-income earners. Zidar reasoned that “states with a large share of high income taxpayers should grow faster following a tax cut for high income earners” if the tax cuts had the economic effect conservatives claim.
What he found, though, is that the effect of tax cuts for the rich was “insignificant statistically,” as Reuters’ David Cay Johnston reported:
“Almost all of the stimulative effect of tax cuts,” Zidar found, “results from tax cuts for the bottom 90%. A one percent of GDP tax cut for the bottom 90% results in 2.7 percentage points of GDP growth over a two-year period. The corresponding estimate for the top 10% is 0.13 percentage points and is insignificant statistically.”
Zidar’s study provides more empirical backing to what the U.S. has experienced over the last 30 years. Supply-side tax cutting policies have not led to the growth their Republican proponents promised. The Bush tax cuts, for instance, were followed by the weakest decade for economic expansion on record.
Still, Republicans, some of whom admit that the Bush tax cuts didn’t lead to the desired growth, are sticking to their ideology. Republican presidential nominee Mitt Romney proposed a tax cut that is four times larger than the Bush tax cuts; the GOP has fought efforts to allow the high-income tax cuts expire at the end of the year, arguing that doing so would dampen growth; and Republican governors across the country have pushed tax cut packagesaimed at the wealthy even as their states struggle with budget shortfalls.
By Alexander Cohen and David Sheppard and Joshua Schneyer
The national energy adviser for Mitt Romney's presidential campaign, Oklahoma oil billionaire Harold Hamm, made political contributions that exceed Federal legal limits by as much as 41 percent, according to data compiled by Reuters.
The data, based on public filings, showed that Hamm's political donations exceeded the legal limits for individual donations to political parties, campaigns and political action committees (PACs) over the 2011-2012 election period.
Hamm, the CEO of oil and gas company Continental Resources, has given $164,700 to parties, PACs and candidates, including Romney, in the current two-year election cycle, in addition to an almost $1 million donation in April to the main Super PAC supporting Romney.
The $985,000 Hamm gave to Super PAC Restore Our Future is legal, because there is no limit on such giving. But his other federal contributions put him well over the legal limit of $117,000 in an election period for an individual donor. Hamm has also exceeded lesser limits both for individual contributions to candidates and to regular political action committees and parties by more than $20,000 each.
Reuters reporters alerted Hamm on Tuesday to the breach of limits and presented him data on Wednesday. The Wall Street Journal reported the donation violations earlier Thursday on its website.
Hamm's political adviser, Mike Cantrell, said in an email on Thursday afternoon that Hamm had intended to break up the donations between himself and his wife, Sue Ann Hamm, which he said would have ensured that Hamm remained under legal contribution limits. The donations were made from a joint account, Cantrell said, but Hamm failed to make clear that they were donations split between Hamm and his wife.
"Apparently some committees and/or campaigns to which Harold and Sue Ann Hamm made contributions reported those as having been contributed solely by Harold Hamm. That was a mistake. Others appear to have been misallocated," Cantrell told Reuters.
Cantrell said Hamm had believed that the contributions would be attributed 50 percent to Harold Hamm and 50 percent to Sue Ann Hamm, because under Oklahoma state campaign finance law, the maximum contribution limits are calculated on a per-family basis. Under federal law, contributions made from a joint bank account are split only if both parties sign the check.
Hamm "believed he was in compliance with all federal and state election laws. After notification from Reuters, Mr. Hamm had his contributions reviewed again," Cantrell said. "Since this was brought to our attention, the recipient committees are being notified and requested to take appropriate steps to correct any errors."
In an interview last week, conducted before the finance violation was clear, Hamm told Reuters he saw no conflicts of interest arising from his financial support and fundraising for Romney or other candidates.
Hamm helped Romney to devise his national energy policy platform for a white paper the campaign released last month. It focuses heavily on opening up more U.S. territory for oil drilling, which could benefit Hamm's company, a top lease-holder in the prolific Bakken oil field of North Dakota.
"Everybody in America supports the candidates that are aligned with their beliefs and their philosophy. This goes back to First Amendment rights," Hamm told Reuters. "We can support the candidate of our choice."
Hamm might face penalties for the donation breaches, up to the excess amount he has contributed.
"The (Federal Election Commission) itself cannot impose a fine," said Paul S. Ryan, senior counsel for the Campaign Legal Center, a Washington D.C. campaign finance organization. He noted that while the Department of Justice retains the authority to prosecute deliberate contribution violations, he hasn't seen them pursue such cases.
The FEC said it couldn't comment on any matters involving donations by individuals.
Aside from his Super PAC contribution earlier this year, Hamm and his wife, Sue Ann, have in total given $430,150 to candidates, PACs and political parties since 1999, with more than half of their overall total coming during this election cycle, according to data compiled from public filings.
Overall, the Hamms gave $367,050 to Republicans, more than six times as much as they gave to Democrats, including contributions to the presidential campaigns of Rudy Giuliani, John McCain and George W. Bush. During this election, less than four percent of the $235,550 they gave went to Democrats.
