2012 - %3, March

Feds Sue AT&T for Aiding and Abetting Nigerian Scammers

| Fri Mar. 23, 2012 11:30 AM PDT

From the National Law Journal:

AT&T Corp. is accused of wrongly collecting millions of dollars from a government fund intended to bankroll telephone service for hearing and speech-impaired people, but was instead overwhelmingly used by Nigerian scammers, the Department of Justice alleged in a False Claims Act suit announced March 22.

Say what? Did AT&T get scammed itself? If DOJ — and the whistleblower who exposed AT&T's involvement — are to be believed, no. They were making lots of money from a program that was designed to help the hearing-impaired make phone calls by typing text that was then relayed as voice communication by an AT&T operator. But it turns out that because the service is anonymous, it became a favorite for Nigerian scammers too. What's more, AT&T knew it:

On April 6, 2010, an AT&T Inc. manager pondered a drop in volume in the company's government-subsidized service for hearing-impaired callers. Reassuring a colleague in an email, the manager said she was "not ready to throw up flags" because "it was Easter Monday yesterday, which is celebrated in Nigeria."

....The government alleges that scammers operating out of Nigeria used the service to defraud U.S. merchants by ordering goods with stolen credit cards and counterfeit checks. In essence, the government alleges, AT&T's operators became mouthpieces for the scam artists.

AT&T got reimbursed $1.30 per minute for these calls, and the government says as many as 95% of them originated with scammers outside the U.S. A new registration program was put in place in 2008, but DOJ says AT&T did its best to undermine it. Bloomberg summarizes:

“We are expecting a serious decline in [internet relay] traffic because fraud will go to zero (at least temporarily) and we haven’t registered nearly enough customers to pick up the slack,” Burt Bossi, a manager of AT&T’s technical team, said to other managers on Sept. 22, 2009, according to the complaint.

The following month, AT&T changed its registration system from a postcard one to an Internet one where users’ addresses are compared to those on a database called DASH to determine whether the address provided exists. Registrations immediately increased to 40 to 100 a day, the government alleges.

By the end of October 2009, AT&T managers were aware that credit card scams were being conducted by new users, the lawsuit alleges. “This is a consequence of easing registration restrictions,” Dave Claus, a technical manager, said in an e- mail to colleagues cited in the complaint.

Needless to say, AT&T says it did nothing wrong. I expect a settlement soon.

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Paul Ryan's 2012 Budget Slightly Less Appalling Toward the Poor

| Fri Mar. 23, 2012 10:52 AM PDT

Sorry. Turns out I was totally wrong about Paul Ryan's budget. It really is different from last year's.

As you can see from the chart on the right, his 2012 budget gets 62% of its cuts from programs intended to help those with low-incomes. According to CBPP, this includes $2.4 trillion in reductions from Medicaid and other health care program; $134 billion in cuts to SNAP (food stamps); at least $463 billion in cuts to mandatory programs serving low-income Americans; and at least $291 billion in cuts in low-income discretionary programs.

But here's the thing: last year's Ryan budget got 65% of its cuts from programs for the poor. Progress! Who says Paul Ryan doesn't care about America's non-rich?

Paul Krugman is Uncharacteristically Optimistic Today

| Fri Mar. 23, 2012 8:53 AM PDT

Paul Krugman says he misjudged the way Paul Ryan's latest budget proposal would be received:

Where I was at least somewhat wrong was in my expectations about how the Very Serious People would treat his latest outing. I thought they would still treat him as a heroic deficit hawk, never mind the fact that his plan is really about transferring money from the poor to the rich, with no credible deficit reduction at all. That, after all, is what they did last year — he even received an award for fiscal responsibility.

But I’m not seeing that this time. Overall, the response seems muted, maybe out of embarrassment. But leaving aside the predictable right-wing cheerleaders, it looks as if the emperor’s nakedness is now common knowledge.

This is an uncharacteristically optimistic view. I don't think the reaction to Ryan was muted because everyone suddenly realized he was a fraud. Reaction was muted because this year's Ryan budget is pretty much the same as last year's Ryan budget. That made it boring, and that's the punditocracy's greatest sin. News outlets don't cover boring stuff. Beyond that, though, I see no reason to think that general attitudes toward Ryan have changed. Liberals still think he's a charlatan; conservatives still think he's the second coming of Ronald Reagan; and the Beltway VSPs still think he's a VSP.

Ironically, there really was one part of Ryan's plan that was different this year: his approach to Medicare reform. But virtually no one outside the wonkosphere seems to have noticed. I guess that's the price of being a bore.

California Cracking Down on Latest Health Insurance Scam

| Fri Mar. 23, 2012 8:30 AM PDT

As you may recall, the health insurance market doesn't work well if companies are allowed to cherry pick their customers. If that's allowed, companies will all chase after the youngest, healthiest customers, leaving the older ones high and dry — and there are plenty of ways of doing this. It's not a matter of only signing up companies that can prove their workforce has an average age of 28; it's a matter of targeting certain kinds of companies, or shaping your plans so they appeal to a younger cohort. Apparently the latest version of this scam involves selling group health policies to small companies that are supposedly self-insured:

Some insurers are chasing after much smaller customers with new plans designed to limit employer payouts for big claims using what's called stop-loss policies. This guarantees that businesses won't be responsible for anything over a certain amount per employee, perhaps as low as $10,000 or $20,000, with the rest paid by an insurer. Regulators and health-policy experts say this arrangement undercuts the notion of self-insurance since employers aren't bearing much of the risk, and it allows companies to circumvent some state insurance rules.

"This is not real self-insurance. This is clearly a sham," said Mark Hall, a professor of law and public health at Wake Forest University who has studied the small-business insurance market. "Regulators have good reason to be concerned about the potential harm to the market."

Self-insurance is attractive for many reasons, particularly the prospect of lower costs. It's exempt from state insurance regulations such as mandated benefits, granting employers the flexibility to design their own benefit package and the opportunity to reap some of the savings from employee wellness programs. A federal law, the Employee Retirement Income Security Act, or ERISA, governs self-funded plans. Some aspects of the Affordable Care Act do apply to self-insurance, such as the elimination of caps on lifetime benefits and some preventive care at no cost.

Yeah, it's a scam. Self-insurance is for companies big enough that they can count on losses evening out. Small companies can't do it because a single million-dollar cancer could wipe them out.

So what's the answer? Easy! Sell small companies on the idea of "self insuring," but only up to $10,000 per employee. After that, the insurance company pays the bill. The advantage to employers is that they get to evade the usual insurance regulations. The advantage to insurers is that small companies tend to be young companies.

Needless to say, an insurance policy with a $10,000 deductible is still an insurance policy. Likewise, these shiny new self-insurance plans are still insurance policies. They look, walk, and quack like ducks. They're ducks. An HHS spokesman says they will "provide more clarity" about their legality soon. Hopefully that clarity will be an outright ban.

Quote of the Day: Rick Santorum Annoys the Powers-That-Be

| Fri Mar. 23, 2012 7:43 AM PDT

From Rick Santorum, telling a campaign crowd that a vote for Mitt Romney is no better than a vote for Barack Obama:

If you’re going to be a little different, we might as well stay with what we have instead of taking a risk with what may be the Etch A Sketch candidate of the future.

Did Santorum really mean this? Or did he mean that voters will perceive Romney as an Obama-lite? Given the context, I suspect the former, but it doesn't really matter. What matters, yet again, is that Santorum is taking a beating from conservatives over this remark. The same people who mostly gave Eric Fehrnstrom a pass for the original Etch A Sketch comment are now going after Santorum for taking advantage of it. The clear message is: we're now in general election mode. No serious criticism of Romney from the right is allowed. It's over.

See also the sort-of-endorsement of Romney from conservative icon Jim DeMint and the tepid-but-real endorsement from Jeb Bush. The establishment is speaking. It's over.

Which is great! Unlike all those mythical campaign reporters who are supposedly so riveted by this year's Republican spectacle that they want it to go on forever — who are these people, anyway? — I've had way more than enough. It's over, and I'm glad it's over. Maybe we can actually talk about something other than candidate gaffes and other assorted campaign atrocities for a few months. Please?

We're Still at War: Photo of the Day for March 23, 2012

Fri Mar. 23, 2012 7:34 AM PDT

US Army soldiers from 1st Platoon, Company A, 1st Battalion, 2nd Infantry Brigade, Task Force Blackhawk, cordon off the town square of a small village near Combat Outpost Yosef Khel on March 10, 2012. US Army photo by Sgt. Ken Scar, 7th MPAD.

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Romney Louisiana Endorser: Undocumented Immigrants Make Walmart a Scary Place

| Fri Mar. 23, 2012 3:00 AM PDT
GOP front-runner Mitt Romney

On Thursday, Mitt Romney's presidential campaign released a new list of Louisiana endorsers, ahead of the state's Saturday primary. Among the supporters? State Rep. Tim Burns of Mandeville, who, in 2008, justified his support for a slate of immigration bills by suggesting that undocumented immigrants had made Walmart unsafe for women:

They're frustrated by the inability to go to Walmart at night, they're scared to go to Walmart at night...You weren't sure you were in this country. Not trying to profile people, but it just seemed like people were concerned, that they were...ah...I'm not trying to say any people there were being rude, or disrespectful or anything, but I could see how somebody, a housewife, could be intimidated to go there.

Walmart actually has pretty tight security, but Burns' point was that a certain group of people were by definition both suspicious and intimidating. It's positions and statements like these that help explain why Latinos are fleeing the Republican primary; just 14 percent of Latino voters say they would support Romney against President Obama in November.

Burns is also an avid opponent of abortion, to the extent that, in 2006, he sponsored a bill that would make the procedure punishable by one year in prison and/or a $10,000 fine. He made exceptions for rape and incest—sort of. Rape victims would need to prove within five days of the rape that they had not been pregnant prior to the crime; the rape must be reported to the police within seven days; and the abortion must be reported within 13 days. In cases of incest, victims would be required to file a police report prior to receiving an abortion (a move that would be severely complicated by the fact that the state also requires parental consent). State Rep. Joe Harrison, whose endorsement was also trumpeted by the Romney campaign on Thursday, introduced a 2011 bill that "would make it a crime to transport or shelter an illegal immigrant, or to help them stay here in the US"—similar to the law that was eventually passed in Alabama.

These aren't Mitt Romney's views in full and he doesn't have to agree with everything an endorser says. But campaigns, especially those as image-conscious as Team Romney, take the endorsement process very seriously, and they generally vet the politicians and leaders whose support they wish to cite. And Lousiana's not an isolated example: Romney has brought Kansas Attorney General Kris Kobach—who helped lawmakers in Alabama and Arizona craft their harsh immigration laws—into the fold as an unpaid adviser, and tepidly embraced fetal personhood when speaking to Christian groups.

Ultimately, all of this underscores a larger issue facing his campaign. Romney has gone out of his way to convince conservative activists that he's just like them. The problem is when everyone else starts believing him.

From the Annals of Bad Political Spin

| Thu Mar. 22, 2012 3:18 PM PDT

Mitt Romney aide Eric Fehrnstrom is getting knocked around pretty badly for his ill-conceived Etch A Sketch comment. And it was pretty ill-conceived! But if you want an example of truly wretched political spinning, check out Meghan Snyder, press secretary for Rep. Jim Jordan of the Republican Study Group. Yesterday, after about the millionth congressional hearing on Solyndra, Jordan said, "What I hope happens is we stop doing these kind of things ... this whole cronyism approach to the marketplace. Ultimately, we'll stop it on Election Day, hopefully. And bringing attention to these things helps the voters and citizens of the country make the kind of decision that I hope helps them as they evaluate who they are going to vote for in November."

Steve Benen pounced: "In other words, Republicans haven't uncovered a 'scandal'; they've uncovered a game to play. For those who figured out months ago that this was a manufactured outrage, Jim Jordan just confirmed it."

I was all ready to think that Steve was being unfair. What Jordan meant was that the "whole cronyism approach to the marketplace" would end on election day because Republicans would win and put an end to it. Nothing wrong with that! But then I clicked the link and read Meghan Snyder's attempt to put her boss's remarks into context:

If you step back a little bit and look at the quote, he's discussing how these Oversight investigations are bringing to light things like, especially in this one, the cronyism of the market place. How he intended it and I believe maybe if you flip the coin you can kind of see, is he's explaining the purpose of Oversight Committee, which is bringing this to light for Americans. A lot of these people vote, and therein maybe lies the mix-up of how it was perceived by your story and maybe another one.

We're just saying this is our purpose and voters see it. Maybe they'll put an end to it on Election Day. But to say that elections drive the Oversight Committee, we believe is incorrect. It's the purpose of the Oversight Committee to conduct these investigations.

Has Snyder been taking lessons from Sarah Palin? Holy cow.

Chevrolet Desperately Wants You to Think They Get It

| Thu Mar. 22, 2012 3:03 PM PDT

The New York Times reports that young people don't really lust after cars anymore. So Chevrolet has hired MTV Scratch, a consulting subsidiary of Viacom, that helps companies connect with kids:

The five-year strategic vision that Scratch has developed for Chevrolet, kept quiet until now, stretches beyond marketing to a rethinking of the company’s corporate culture. The strategy is to infuse General Motors with the same insights that made MTV reality shows like “Jersey Shore” and “Teen Mom” breakout hits.

OK. But in the entire story, this is the only concrete example of what MTV Scratch has brought to the table:

Last summer, Mr. Martin and his team temporarily transformed part of the G.M. lobby into a loftlike space reminiscent of a coffee shop in Austin or Seattle, with graffiti on the walls and skateboards and throw pillows scattered around.

....On a recent Tuesday morning...a couple of car executives huddled around a “persona board” in the color and trim laboratory. They studied a collage loaded with images of hip products like headphones designed by Dr. Dre, a tablet computer and a chunky watch. The board inspired new Chevrolet colors, like “techno pink,” “lemonade” and “denim,” aimed at “a 23-year-old who shops at H&M and Target and listens to Wale with Beats headphones,” said Rebecca Waldmeir, a color and trim designer for Chevrolet. This rainbow of youthful hues will be available on the Spark this summer.

In fairness, the story does mention in passing possible changes to dashboard technology (you need MTV Scratch for that?) and dealership structure (good luck!). But it's all pretty hazy except for the new colors. I dunno. I'm 53 years old, and even I'm not feeling the hipness. More like the stink of fear.

Rick Santorum, Puppy Lover—and Scourge of the Meat Industry?

| Thu Mar. 22, 2012 1:40 PM PDT
Shock and awwwww: If these make you melt, you may not get Big Ag's support.

Rick Santorum has a thing for puppies. Not a creepy fixation, mind you—apparently, he just doesn't like to see them raised in vast "puppy mills." Santorum also evidently likes horses, and would prefer not to see them slaughtered. And these stances has led him to make common cause with the Humane Society of the US.

Strange then, that a man who deplores the stuffing of puppies into confined spaces and recoils from the slaughter of innocent horses, has no beef with an industry that stuffs cows, pigs, chickens, and turkeys into tight spaces with the intention of slaughtering them.  

I know all of this, because of an exposé on Forbes.com posing the question: "Is Rick Santorum a Closet Animal Rights Activist?"; and a piece in the industrial-ag trade weekly Agri-Pulse ($ub only) called "Santorum raises 'aggie' eyebrows over HSUS [Humane Society of the US] ties."