David Corn

David Corn

Washington Bureau Chief

Corn has broken stories on presidents, politicians, and other Washington players. He's written for numerous publications and is a talk show regular. His best-selling books include Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War.

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What If There Is No Fiscal Crisis?

| Thu Dec. 13, 2012 2:05 PM PST

If there is no fiscal crisis, can there be a fiscal cliff?

The current hullabaloo over tax cuts, spending cuts, entitlement programs, and the debt ceiling has yielded much fodder for policy-minded columnists, practically establishing a job creation program for budget-following wonks. Recently, there have been a rash of articles from this set advancing the essential point that raising the eligibility age for Medicare, a proposal that might be on the table (that is, if there is a table), would be awful policy because doing so would remove healthier seniors from the Medicare pool and place this older group into the non-Medicare pool and boost costs there. (Health care costs would presumably go up overall—and particularly for private employers who would have to carry these 65- and 66-year-olds on their policies.) Has this spate of policy op-edding influenced the negotiating positions? We don't know. The talks are all hush-hush. And this week, another policymeister, in one of the most consequential columns of the past fortnight, added another significant contention to the discourse: There is no fiscal crisis.

Bruce Bartlett, who was an economics official in the administrations of Presidents Ronald Reagan and George H.W. Bush, is a contributor to the New York Times' Economix blog, and in an important post a few days ago he delved into the Government Accountability Office's new estimates of the federal government’s long-term budget outlook. The bottom line: "The idea that we are facing a crisis is complete nonsense." Bartlett, by the way, considers himself a conservative, a reality-based conservative. He points out, per the GAO report:

[S]pending is not out of control. Entitlement programs like Social Security and Medicare are rising gently as the baby-boom generation retires. All other spending, including that for the military and domestic discretionary programs, falls—with the notable exception of interest on the debt. Interest rises sharply as the deficit rises, principally because the G.A.O. assumes that revenue will not be permitted to rise above its historical average—as Republicans continually insist.

In other words, the inability to raise revenue to diminish deficits—and tackle rising interest payments—is the major problem.

Here it is in chart form, courtesy of the GAO:

Note the explosive growth in net interest. Using these numbers, Bartlett writes that the GOP's demand that Social Security and Medicare be cut immediately—say, by raising the age of eligibility for Medicare and changing the inflation adjustment formula for Social Security—is not in sync with the actual data:

To be sure, some restraint is needed in federal entitlement programs…Spending for Social Security, in particular, is very stable. Relatively modest changes, such as raising the taxable earnings base slightly, would be sufficient to put the program on a sound footing virtually forever.

Bartlett chides Republicans for droning on and on that domestic discretionary spending is responsible for bloated government. But, he points out, "such programs have already been cut sharply by the Budget Control Act of 2011." He adds, "That leaves interest on the debt as the principal driver of long-term spending and deficits." And if the Rs continue to resist raising revenues, he maintains, there will be higher spending for interest on the debt. (The interest line in that chart could even be much greater, if interest rates go up.)

Bartlett advocates letting all the George W. Bush tax cuts expire and all the automatic spending cuts kick in. He acknowledges that this might cause a short-term hit to the economy, but he argues that taming the deficits will lead to medium- and long-term growth. Whether that's the right policy solution or not—it does entail a difficult trade-off—it's at least based on data that reflects the real world.

His post, though, does make one thing clear: President Barack Obama (or anyone else) need not rush into a big deal at this moment. There is no imminent fiscal crisis regarding entitlements. The Republicans are merely hyping the matter to bolster their attempts to extract a ransom for either (a) extending the Bush tax cuts for the bottom 98 percent, or (b) acceding to a hike in the debt ceiling, which will soon reach its latest limit, or both. The sky is not falling. It is not on fire. And the cliff may not be that frightening.

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Dick Armey: "This Kind of Secrecy Is Why I Left" FreedomWorks

| Fri Dec. 7, 2012 2:42 PM PST

The Sunlight Foundation, a group that pushes for more transparent politics and policymaking, on Friday reported that federal records show that two mystery companies in September donated over $12 million to the super PAC of FreedomWorks, the tea party-supporting organization that this week was rocked by the abrupt resignation of its chairman, Dick Armey, the former Republican House majority leader. These contributions accounted for more than half of the $23.2 million the group raised for the 2012 campaign, and they came from two shadowy Knoxville-Tennessee-based firms—Specialty Group, Inc., and Pike Development LLC—that publicly have no reason to exist other than apparently to make contributions and mask the true source of the money. Moreover, Armey tells Mother Jones that he knew nothing about the donations or the origins of the cash and that he quit FreedomWorks partly because of a lack of transparency.

After the Sunlight Foundation posted this report—noting that the sources of this funding "remain shadowy"—Mother Jones contacted Armey and asked if he had been aware of these contributions and of where the money came from. He replied, "I know nothing about this."

That seemed odd. He was until last Friday the chair of FreedomWorks. Shouldn't he have been in the loop? "This kind of secrecy is why I left," Armey maintained. He added, "I have never seen anything like this before."

Mother Jones then reached Matt Kibbe, the president of FreedomWorks (whom Armey has accused of misappropriating FreedomWorks resources for his own personal benefit), and asked if it was unusual for the chairman of an outfit to be in the dark about half of the group's funding. "Well, we have 81,000 individual donors," Kibbe replied. Indeed, but only two donations that account for over $12 million. Nothing curious about Armey not being in-the-know? "It's not unusual," Kibbe said. He continued: "I don't know about these [donations]. It's the first time I've heard."

This seemed even more bizarre. Would Kibbe not know where half of the money for his group's super PAC came from? In fact, in September, Associated Press reported,

A shadowy Tennessee company donated more than $5 million to a prominent conservative super political action committee days after establishing itself…Campaign finance reports filed late Thursday show that the political committee, FreedomWorks for America, received seven donations totaling $5.28 million from Knoxville-based Specialty Group Inc. The money, which accounted for about 90 percent of FreedomWorks for America's donations during the first 15 days of October, is helping pay for TV ads supporting conservative candidates for federal office.

That money helped underwrite a massive $1.5 million television ad buy targeting Democrat Tammy Duckworth who was challenging Rep. Joe Walsh (R-Ill.), a leading tea partier. At the time, a FreedomWorks spokesman declined to comment, and the registered owner of Specialty Group, William S. Rose, stayed mum, as well. (The money didn't help; Duckworth won the race.)

When asked how he could not be aware of these hefty donations, Kibbe requested that he be sent the Sunlight Foundation article and said, "I'm not supposed to comment before reading."

Armey's bad-blood departure from FreedomWorks—which yielded him an $8 million payout—has created a bigtime dustup. And the group's big secrets may well be in jeopardy.

Elliott Abrams, Massacre-Denialist, Hailed as a Statesman

| Thu Dec. 6, 2012 11:04 AM PST

 This morning I received a press release with this announcement:

The Washington Institute for Near East Policy will give Elliott Abrams, CFR's senior fellow for Middle East Studies, its Scholar-Statesman Award at a dinner in New York City tonight. The Scholar-Statesman Award celebrates leaders who exemplify the idea that sound scholarship and a discerning knowledge of history are essential to effective policy, as well as the advancement of peace and security in the Middle East.

I nearly choked. Why? The easiest way to explain is for me to crib and post here an article I wrote for The Nation over a decade ago:

"How would you feel if your wife and children were brutally raped before being hacked to death by soldiers during a military massacre of 800 civilians, and then two governments tried to cover up the killings?" It's a question that won't be asked of Elliott Abrams at a Senate confirmation hearing because George W. Bush, according to press reports, may appoint Abrams to a National Security Council staff position that (conveniently!) does not require Senate approval. Moreover, this query is one of a host of rude, but warranted, questions that could be lobbed at Abrams, the Iran/contra player who was an assistant secretary of state during the Reagan years and a shaper of that Administration's controversial—and deadly—policies on Latin America and human rights. His designated spot in the new regime: NSC's senior director for democracy, human rights and international operations. (At press time, the White House and Abrams were neither confirming nor denying his return to government.)

Bush the Second has tapped a number of Reagan/Bush alums who were involved in Iran/contra business for plum jobs: Colin Powell, Richard Armitage, Otto Reich and John Negroponte. But Abrams's appointment—should it come to pass—would mark the most generous of rehabilitations. Not only did Abrams plead guilty to two misdemeanor counts of lying to Congress about the Reagan Administration's contra program, he was also one of the fiercest ideological pugilists of the 1980s, a bad-boy diplomat wildly out of sync with Bush's gonna-change-the-tone rhetoric. Abrams, a Democrat turned Republican who married into the cranky Podhoretz neocon clan, billed himself as a "gladiator" for the Reagan Doctrine in Central America—which entailed assisting thuggish regimes and militaries in order to thwart leftist movements and dismissing the human rights violations of Washington's cold war partners.

One Abrams specialty was massacre denial. During a Nightline appearance in 1985, he was asked about reports that the US-funded Salvadoran military had slaughtered civilians at two sites the previous summer. Abrams maintained that no such events had occurred. And had the US Embassy and the State Department conducted an investigation? "My memory," he said, "is that we did, but I don't want to swear to it, because I'd have to go back and look at the cables." But there had been no State Department inquiry; Abrams, in his lawyerly fashion, was being disingenuous. Three years earlier, when two American journalists reported that an elite, US-trained military unit had massacred hundreds of villagers in El Mozote, Abrams told Congress that the story was commie propaganda, as he fought for more US aid to El Salvador's military. The massacre, as has since been confirmed, was real. And in 1993 after a UN truth commission, which examined 22,000 atrocities that occurred during the twelve-year civil war in El Salvador, attributed 85 percent of the abuses to the Reagan-assisted right-wing military and its death-squad allies, Abrams declared, "The Administration's record on El Salvador is one of fabulous achievement." Tell that to the survivors of El Mozote.

But it wasn't his lies about mass murder that got Abrams into trouble. After a contra resupply plane was shot down in 1986, Abrams, one of the coordinators of Reagan's pro-contra policy (along with the NSC's Oliver North and the CIA's Alan Fiers), appeared several times before Congressional committees and withheld information on the Administration's connection to the secret and private contra-support network. He also hid from Congress the fact that he had flown to London (using the name "Mr. Kenilworth") to solicit a $10 million contribution for the contras from the Sultan of Brunei. At a subsequent closed-door hearing, Democratic Senator Thomas Eagleton blasted Abrams for having misled legislators, noting that Abrams's misrepresentations could lead to "slammer time." Abrams disagreed, saying, "You've heard my testimony." Eagleton cut in: "I've heard it, and I want to puke." On another occasion, Republican Senator Dave Durenberger complained, "I wouldn't trust Elliott any further than I could throw Ollie North." Even after Abrams copped a plea with Independent Counsel Lawrence Walsh, he refused to concede that he'd done anything untoward. Abrams's Foggy Bottom services were not retained by the First Bush, but he did include Abrams in his lame-duck pardons of several Iran/contra wrongdoers.

Abrams was as nasty a policy warrior as Washington had seen in decades. He called foes "vipers." He said that lawmakers who blocked contra aid would have "blood on their hands"--while he defended US support for a human-rights-abusing government in Guatemala. When Oliver North was campaigning for the Senate in 1994 and was accused of having ignored contra ties to drug dealers, Abrams backed North and claimed "all of us who ran that program...were absolutely dedicated to keeping it completely clean and free of any involvement by drug traffickers." Yet in 1998 the CIA's own inspector general issued a thick report noting that the Reagan Administration had collaborated with suspected drug traffickers while managing the secret contra war.

So Bush the Compassionate may hand the White House portfolio on human rights to the guy who lied and wheedled to aid and protect human-rights abusers. As Adm. William Crowe Jr. said of Abrams in 1989, "This snake's hard to kill."

 Abrams was rehabbed by the foreign policy crowd years ago. But he still has blood on his hands. I wonder what they'll be serving at the dinner. 

Exclusive: Dick Armey Quits Tea Party Group in Split Over Direction (UPDATED)

| Mon Dec. 3, 2012 5:15 PM PST
Dick Armey

This story has been updated. Click here for the latest.

In a move not publicly announced, former Rep. Dick Armey, the folksy conservative leader, has resigned as chairman of FreedomWorks, one of the main political outfits of the conservative movement and an instrumental force within the tea party.

Armey, the former House majority leader who helped develop and promote the GOP's Contract with America in the 1990s, tendered his resignation in a memo sent to Matt Kibbe, president and CEO of FreedomWorks, on November 30. Mother Jones obtained the email on Monday, and Armey has confirmed he sent it. The tone of the memo suggests that this was not an amicable separation. (See Armey's email below.) Armey demanded that he be paid until his contract ended on December 31; that FreedomWorks remove his name, image, or signature "from all its letters, print media, postings, web sites, videos, testimonials, endorsements, fund raising materials, and social media, including but not limited to Facebook and Twitter"; and that FreedomWorks deliver the copy of his official congressional portrait to his home in Texas.

"The top management team of FreedomWorks was taking a direction I thought was unproductive, and I thought it was time to move on with my life," Armey tells Mother Jones. "At this point, I don't want to get into the details. I just want to go on with my life." 

In the email, Armey indicated that he wants nothing to do with FreedomWorks anymore. He asked that all user names, passwords, and security-related data created in his name be emailed to him by the close of business on December 4. He even insisted that FreedomWorks—"effective immediately"—was "prohibited" from using a booklet he authored. Was Armey's resignation a reaction to the recent election results? "Obviously I was not happy with the election results," he says. "We might've gotten better results if we had gone in a different direction. But it isn't that I got my nose out of line because we should've done better."

Armey declined to specify his disagreements with FreedomWorks. Asked if they were ideological or tactical, he replies, "They were matters of principle. It's how you do business as opposed to what you do. But I don't want to be the guy to create problems."

After leaving Congress in 2003, Armey joined the conservative advocacy group Citizens for a Sound Economy as co-chairman. The following year, the organization, which had been cofounded by Charles and David Koch, split off to become FreedomWorks. Its sister outfit, Americans for Prosperity, has been a prominent grassroots conservative group.

FreedomWorks, under Armey's leadership, was a key player in the rise of the tea party in 2010. The organization helped elect tea party favorites, including Sen. Mike Lee (R-Utah) and Reps. Renee Ellmers (R-N.C.) and Tim Scott (R-S.C.). Armey led the fight to eliminate Obamacare, emailing every Republican member of Congress after the 2010 elections with a strategy for gutting President Obama's signature health care law. FreedomWorks has acted an connector between tea party groups around the country, organizing protests against Obamacare and expanding the ranks of the conservative movement. In 2010, Armey and Kibbe together published Give Us Liberty: A Tea Party Manifesto.

Mother Jones contacted Kibbe and FreedomWorks spokeswoman Jacqueline Bodnar for comment. Neither responded. 

Armey says he doesn't know what he will do next, but he is considering consulting work.

Here is Armey's November 30 memo to Kibbe:

November 30, 2012
To: Matt Kibbe, President, FreedomWorks Inc.
From: Honorable Richard K. Armey
Regarding: Resignation

This is to inform you that as of 5:00 P.M. ET on November 30, 2012 I resign my position of Trustee at FreedomWorks, Inc. and my positions of Chairman of FreedomWorks and FreedomWorks Foundation.

As I resign from all board positions and duties, please see below a list of dispositions on outstanding issues: I expect to be fully compensated through the expiration date (December 31, 2012) of my current consulting contract with FreedomWorks. Henceforth FreedomWorks shall be prohibited from using my name, image, or signature in any way or for any purpose without my written permission or in the event of my death, without my heirs written permission.

Effective immediately I expect that Freedom Works shall remove my name, image, and signature from all its letters, print media, postings, web sites, videos, testimonials, endorsements, fund raising materials, and social media, including but not limited to Facebook and Twitter. I expect to receive via email at [redacted] by the close of business, December 4, 2012, all user names, passwords, security questions, and security answers for all accounts, web sites and social media, including but not limited to Facebook and Twitter, created in my name.

Effective immediately FreedomWorks is prohibited from using my booklet or any updated versions of my booklet "Hitting the Ground Running" without my written permission which I innovated while still in congress and trusted to Max Pappas to update for new member orientation. I request that FreedomWorks deliver the copy of my official congressional portrait to my home in Texas.

UPDATE: More details emerged on Monday about Dick Armey's departure from FreedomWorks. The Associated Press obtained a contract dated September 24 indicating that Armey will make $8 million in consulting fees in exchange for leaving the organization. In an email to Mother Jones, Armey confirmed the $8 million deal, and said the contract was between him and FreedomWorks board member Richard Stephenson.

A handful of key FreedomWorks officials said Monday that they, too, were leaving the organization. According to Roll Call, Max Pappas, the former vice president for public policy and government affairs, and campaigns director Brendan Steinhauser are both quitting the group. Two staffers who worked with Steinhauser have also departed.

FreedomWorks president and CEO Matt Kibbe and several of the group's board members have not returned calls for comment.

Click here to return to the top of the story.

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