2011 - %3, February

Obama's Fruit Cake Détente With Chamber

| Mon Feb. 7, 2011 4:09 PM EST

Today's takeaway from President Obama's address to the US Chamber of Commerce, his most powerful political foe, is that he and his next-door neighbors need to try harder to get along. "I'm here in the interest of being more neighborly," Obama told a crowd of CEOs at the Chamber's headquarters, which is across the street from the White House. "Maybe if we would have brought over a fruit cake when I first moved in, we would have gotten off on a better foot. But I'm going to make it up."

The irony of the fruit-cake quip might have been lost on the Chamber crowd, which isn't exactly known for its political empathy. Here is a president who mortgaged the future of America's middle class to bail out its corporate leaders from the recession that they caused, and yet in return, has been on the receiving end of an unprecedented corporate hissy fit in Washington. Imagine if the president of a homeowners association rescued the neighborhood from a wildfire but was voted out of office because he wanted the people living in mansions to do their fair share to prevent another conflagration. That's the prospect facing Obama.

It could well be that his only remaining option is to bake up the political equivalent of fruit cake—fruity ideas such as free trade agreements, regulatory cutbacks, and tax breaks for the wealthy. It might not taste very good to most of us, but maybe its saccharine combination of trickle-down economic concepts will be durable enough to last through the next election. 

Updated 2/8/11 at 8:35 AM Pacific

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Why Zombies Matter

| Mon Feb. 7, 2011 3:53 PM EST

MoJo copy editor Adam Weinstein on Daniel Drezner's Theories of International Politics and Zombies:

Drezner's real genius is that he's written a stinging postmodern critique of IR theorists themselves, applying the full force of their structured reasoning to topics as diverse as Michael Jackson's breakdancing zombies, Peter Jackson's lesser film canon (Dead Alive, a splendid Kiwi undead gorefest), and romantic zombie comedy flicks—"rom zom coms," as he puts it. It's both a pedagogical text and a lampoon of pedagogy.

TIPZ is a pretty good book. As Adam says, it's part mockery ("postmodern critique" wouldn't have occurred to me, but maybe it's that too) and part serious primer about the insights and weaknesses of various IR theories. If you're looking for something to get you up to speed for cocktail parties in an hour or two, this is just the ticket. If you like lame zombie jokes, so much the better.

Which reminds me: Personally speaking, this has been a remarkably good year for books so far. Looking over at my pile o' discarded books, I see that I've read eight so far and every single one of them has been pretty good. That's just coincidence, but it's a nice coincidence.

(Aside from TIPZ, this year's reading material so far has been: Robert A. Heinlein, by William Patterson, Supreme Conflict, by Jan Crawford Greenburg, Invisible Hands, by Kim Phillips-Fein, Capitalizing on Crisis, by Greta Krippner, Burr, by Gore Vidal, A Terrible Splendor, by Marshall Jon Fisher, and Our Hero: Superman on Earth, by Tom De Haven. All recommended if you happen to be interested in the subject material.)

Corporate America's Public Enemy No. 1: The EPA

| Mon Feb. 7, 2011 3:02 PM EST

On Monday, House oversight committee chair Darrell Issa (R-Calif.) released more than 100 letters he has received from corporations, trade groups, and associations outlining the regulations they'd like to see changed. The letters make clear that the Environmental Protection Agency is corporate America's top target.

Issa solicited solicited lists of burdensome regs from the business community last month, and the early responses focused largely on environmental rules businesses would like to see axed. The Wall Street Journal got an early look a the letters, with includes dozens of gripes about the EPA's current and proposed rules from 30 different organizations:

Groups complained about dozens of other proposed and existing EPA regulations in letters viewed by the Journal, including the agency's plans to tighten limits on emissions of some pollutants from industrial boilers, ground-level ozone, mountain-top mining, cooling water intake structures, the level of nutrients in Florida waters, and pollutants in the Chesapeake Bay.

In all, Issa's office released 1,947 pages of letters. Here's a sample from William Kovacs, vice president of environment, technology and regulatory affairs at the US Chamber of Commerce, critiquing the overall impact of environmental regulation, not just individual rules it takes issue with:

In recent years, EPA seems to have increased both the breadth and the burden of its regulation of the business community. For whatever reason, it has largely spent the last 24 months attempting to modify, re-issue, or re-interpret virtually every controversial environmental regulatory decision of the past decade.

"Whatever reason" happens to be that the Obama administration has been actually trying to set rules based on science and public health, unlike the previous administration. On the question of limits on ozone pollution, which the Chamber takes issue with, the administration has indicated that it intends to take the advice of its scientists, which was ignored under Bush. And on greenhouse gas emissions, another Chamber target, the EPA has simply moved forward under the direction of the Supreme Court, after the Bush administration chose to ignore its obligation on that front.

Obama's Sucker Play for Republican Governors

| Mon Feb. 7, 2011 1:45 PM EST

OMB Director Jack Lew, speaking for the Obama administration, wrote an op-ed in the New York Times this weekend reiterating Obama's dedication to fiscal prudence and providing three examples of programs that Obama is willing to cut. All three are programs that benefit states, and Stan Collender thinks this isn't a coincidence:

The proposals are going to put a lot of Republican governors and mayors on the spot. I suspect the administration wants to force these GOP officials to be seen lobbying against the spending cut proposals. Look for them to be invited to some high profile meetings at the White House with heavy media coverage.

It's possible that Republican governors will decide not to take the bait, but Stan is certainly right that this is our first look at how the budget battles are going to unfold. Republicans are going to propose cuts to programs liberals like and Democrats are going to propose cuts to programs that include conservatives as at least part of their constituency. Then they can fight it out and decide not to cut all that much out of the federal budget after all. Should be loads of fun.

Why You Hate Air Travel Less Than You Think

| Mon Feb. 7, 2011 1:30 PM EST

How much technological progress have we made since 1973? I don't want to drive this question into the ground, but Matt Yglesias makes a point about air travel that bears scrutiny:

Today’s planes are, in fact, technologically superior to the planes of yore. But the travel experience has been made much worse by massive over-investment in airplane security. Inefficient pricing of runway space leads to lots of problems.

True. And yet, which would you take, 1973 or 2011? It's 2011 by a landslide. Fifty years ago, the technological improvement we all expected was faster airplanes. We didn't get that. What we got instead was way cheaper and more abundant flights thanks to deregulation and the computer revolution, which made capacity management far more effective than in the past. One of the results of all this has been crowded flights and crowded airports, and of course increased security has made the flying experience less pleasant too. Still, taken as a whole, I'd say that the airline industry has made tremendous progress since 1973. It just hasn't been where we expected it to be.

Also of interest: the contribution of the airline industry to GDP probably hasn't changed an awful lot since 1973. But its contribution to the increased wellbeing of the median person has increased tremendously. In 1973, the average schmoe simply never flew: it was too expensive and flights weren't always very convenient. Today, nearly anyone can afford to fly at least occasionally. So this is one area where pure measures of GDP probably understate the benefit to the median person. People who are already rich would prefer faster planes, but people who aren't would simply prefer planes they can afford. And that's what we got.

Kochs Spent Big on EPA Foes

| Mon Feb. 7, 2011 1:11 PM EST

If you really want to influence politics, it's not enough to fund think-tankers and build a network of media buddies. You also need some friends in high places. The brothers Koch know that better than anyone, and they've spent big on the members of Congress who will craft energy policy for the next two years.

The Los Angeles Times has a piece today looking at the election expenditures that the Kochs' Kansas-based oil and gas conglomerate and its Political Action Committee have made in recent years. As it turns out, much of the money has gone to Republican candidates (and a few Democrats) who now hold prime seats on the House Energy and Commerce Committee. This election cycle, Koch passed Exxon and Valero as the largest oil and gas sector donor to current members of the committee. The Kochs and their employees gave $279,500 to 22 Republicans and $32,000 to five Democrats on the committee during the 2010 election cycle. Of the five Democrats that Koch PAC supported in 2010, three voted against the cap and trade bill in 2009—John Barrow of Georgia, Jim Matheson of Utah and Mike Ross of Arkansas. From the article:

Nine of the 12 new Republicans on the panel signed a pledge distributed by a Koch-founded advocacy group — Americans for Prosperity—to oppose the Obama administration's proposal to regulate greenhouse gases. Of the six GOP freshman lawmakers on the panel, five benefited from the group's separate advertising and grass-roots activity during the 2010 campaign.

Many of the committee-members the Kochs have supported are leading the efforts to block the Environmental Protection Agency from regulating greenhouse gases. Fred Upton (R-Mich.), the new chairman of the panel, was one of the biggest recipients of donations from Koch employees, at $20,000. Upton used to be a moderate on climate and energy, and once even supported the principle of cutting emissions, but took a giant leap back on the issue amidst a contentious race for the top spot on the panel. In late December, Upton coauthored an op-ed in the Wall Street Journal with AFP head Tim Phillips stating that they are "not convinced" that greenhouse gas emissions are a problem that needs to be dealt with. Last week, Upton released a bill that he wrote with the Senate's biggest climate skeptic, James Inhofe (R-Okla.), that would permanently bar the EPA from regulating planet-warming emissions.

It's also worth noting that the network of Koch associates is also influential when it comes to funding candidates. The forthcoming Greenpeace report I noted last week also found that the members of the guest list for last year's Koch strategy confab have contributed more than $61 million to federal campaigns since 1990.

The LAT piece has more on the ties between the Kochs and the candidates they have supported. It is worth checking out.

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Palin Supports Gays at CPAC

| Mon Feb. 7, 2011 12:28 PM EST

For months now, a handful of influential right-wing evangelical groups and elected officials have been complaining loudly that the venerable Conservative Political Action Conference (CPAC) has abandoned its support of family values because the organizers have deemed to let a gay conservative group, GOProud, participate in the event. CPAC, which begins Thursday in DC, is a testing ground for GOP presidential aspirants and a showcase for conservative politicians. On hand this week for the event will be such luminaries as Rep. Michele Bachmann (R-Minn.), Mitt Romney, Newt Gingrich, former defense secretary Donald Rumsfeld, Rep. Ron Paul (R-Texas), Ann Coulter, and a host of others. But on Monday, evangelical groups including the Heritage Foundation, the American Family Association,  and the Family Research Council, among others, took out a full-page ad in the Washington Times headlined, "What would Ronald Reagan think?" bashing CPAC organizers for allowing gay conservatives a seat at the table. (Reagan spoke at CPAC in 1977.)

But while the evangelical groups have been up in arms about GOProud's involvement, promising to boycott, an unusual supporter has emerged for CPAC's decision to keep its tent big: Sarah Palin. On Sunday night, Palin appeared on the Christian Broadcasting Network, in an interview with David Brody, who asked Palin about the CPAC controversy, noting that politicos like Sen. Jim DeMint (R-SC), Mike Huckabee, and others were boycotting the event because of GOProud's presence. Palin is not attending CPAC either, but she insisted that her absence was because of scheduling issues and had nothing to do with how she felt about GOProud. In fact, she said, including different people who you may not agree with was not much different from appearing on a panel discussion with a bunch of liberals. Palin insisted that opposing viewpoints were esential for a "healthy debate, which is needed in order for people to gather information and make up their own minds about issues. I look at participation in an event like CPAC or any other event, along, or kind of in that same vein as the more information that people have the better.”

Palin is in good company. Despite the question in the full-page Washington Times ad suggesting that Reagan, who would have been 100 this month, might frown on the inclusion of gays at CPAC, there's plenty of reason to believe that the Gipper would have been firmly in Palin's camp. Reagan, having worked in Hollywood before getting into politics, had a lot of gays in his administration and close friends who were gay (Rock Hudson!). Not only that, however, but the year after he addressed CPAC, he was instrumental in helping defeat a ballot initiative in California that would have banned gays and lesbians and anyone who supported them from teaching in the state's public schools. A week before the vote on the initiative, Reagan wrote an op-ed in the Los Angeles Herald-Examiner arguing, "Whatever else it is, homosexuality is not a contagious disease like the measles. Prevailing scientific opinion is that an individual's sexuality is determined at a very early age and that a child's teachers do not really influence this." It's hard to imagine that a politician brave enough to write such a statement in 1978, even as he was preparing to run for president, would have been especially cowed at the thought of bumping up against a few gay Republicans at CPAC. Jim DeMint should take note.

Arianna Huffington: The $315 Million Woman

| Mon Feb. 7, 2011 12:22 PM EST

Last night I saw a tweet saying that AOL was going to buy the Huffington Post for $31.5 million. Yowza, I thought. That's a pretty rich valuation. Maybe 20x forward earnings? Who knows?

But no! AOL actually bought HuffPo for $315 million. I mentally put in a decimal place where there wasn't one. I don't even know what to think about this. It sounds completely crazy to me. The odds of this being a good deal for AOL stockholders seem astronomical.

Still, maybe I'm the one who's crazy. After all, I haven't paid a lot of attention to either HuffPo or AOL lately. I'm a huge skeptic of synergy arguments of all kinds, but maybe Arianna is right when she says that in this deal, 1+1=11. Anybody in comments want to make the case in favor of this being the deal of the century?

UPDATE: Felix Salmon puts some numbers to the deal and defends it as a good one:

The $315 million that AOL is paying for the Huffington Post is roughly 3X the valuation seen at its last capital raise two years ago, is 10X its 2010 revenues and is roughly 5X estimated forward 2011 revenues. Those are all big numbers, but not insanely so....My feeling, then, is that this deal is a good one for both sides. AOL gets something it desperately needs: a voice and a clear editorial vision. It’s smart, and bold, to put Arianna in charge of all AOL’s editorial content, since she is one of the precious few people who has managed to create a mass-market general-interest online publication which isn’t bland and which has an instantly identifiable personality. That’s a rare skill and one which AOL desperately needs to apply to its broad yet inchoate suite of websites.

Maybe so.

Mubarak's Billions

| Mon Feb. 7, 2011 11:54 AM EST

The details of Mubarak’s fortune are a bit muddy, but according to various press reports, the family’s total wealth runs well into the tens of billions of dollars.

In Asia Times Online, Pepe Escobar reports:

According to a mix of United States, Syrian and Algerian sources his personal fortune amounts to no less than US $40 billion – stolen from the public treasury in the form of “commissions”, on weapons sales, for instance. The Pharaoh controls loads of real estate, especially in the US; accounts in US, German, British and Swiss banks; and has "links" with corporations such as MacDonald’s, Vodafone, Hyundai and Hermes. Suzanne, the British-Irish Pharaoh’s wife, is worth at least $5 billion. And son Gamal – the one that may have fled to London, now stripped of his role as dynastic heir – also boasts a personal fortune of $17 billion. Or some $60 billion. Some speculate the fortune is around $70 billion.’

Should Mubarak skip the country, as Corey Pein points out in War Is Business, he might well do it in a  business jet provided free of charge by the US taxpayers. “Pentagon contracts show that the US government has spent at least $111,160,328 to purchase and maintain Mubarak’s fleet of nine Gulfstream business jets. (For those keeping score, Gulfstream is a subsidiary of General Dynamics.)” War Is Busines provides copies of the actual contracts. Here is one of them:

 

Obama Enters the Chamber

| Mon Feb. 7, 2011 10:58 AM EST

Big business, we hear you.

That's one of the messages the White House has been trying to send since last November's election. December's business-friendly tax package and the hirings of ex-JP Morgan exec Bill Daley and General Electric CEO Jeff Immelt probably helped. But President Obama hopes to really kick the pro-business messaging into high gear Monday morning in a post-election hand-holding session with US Chamber of Commerce President Tom Donohue.

Unfortunately, it's unclear whether Donohue and the chamber actually speak for the community they claim to represent: over half of the Chamber's funding comes from just 16 contributors. And as Mother Jones reported last November, almost 94% of the Chamber's budget came from fewer than 1,500 of its 50-100,000 members—a number that continues to shrink. This year, over 50 local chambers cut ties with or distanced themselves from the national body, many over its lobbying against health care reform. Donohue, meanwhile, has made no secret of the chamber's habit of handing its lobbying agenda over to its highest donors, granting large corporations like BP and Goldman Sachs "all the deniability they need." But now, even big-name companies like Apple, General Electric, and Nike, are turning their backs on the chamber over its anti-environment views.

The chamber is also contending with allegations that it used over $18 million from the AIG-affiliated Starr Foundation for political advocacy instead of the charitable uses for which it was intended. And speaking of political advocacy, the chamber spent $32 million on misleading political ads on behalf of Republican candidates in last year's elections. Many of these ads also drove off local members.

On Monday, the Agenda Project, a a New York‐based public policy center, put out a video slamming Obama for the meeting (it's embedded below). "Two weeks ago [in his State of the Union speech] the President promised that he would work to rebuild people's faith in government—meeting with the biggest lobbyists in the country is hardly a step in the right direction," said Agenda Project Founder Erica Payne. "The President is well aware that the Chamber is in actuality just a high priced lobbyist for a small number of corporations. I hardly think the President will restore our faith in government by fawning over the banks at the center of the financial crisis, oil companies like BP who destroyed the Gulf and insurance companies who secretly funneled $10 million through the Chamber to fight insurance reform," Payne said.

What's the Chamber to do? Unyoking itself from big business runs the risk of alienating the big corporate contributors that bankroll its activities. It's the moment of truth for the lobby: does it recommit itself to the mission of its local chapters, or continue down the road of self-imposed marginalization by continuing to do the bidding of the most notorious members of corporate America?