Video: Chasing Campaign Cash in DC

What happens when you try to visit every campaign fundraiser held in Washington DC in a single day? You get turned down at lot, and you realize that lawmakers don't spend as much time slaving away over issue briefs as you might think. From the American News Project:

The way fundraising bastardizes the work of Congress is one of the things that Robert Kaiser, who wrote So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government, talked about in an interview with Mother Jones.

MJ: You write about the way in which the increasing need to raise money has changed the day-to-day activities of congressmen. Talk a little about that.

RK: This is one of the things I simply did not know about before doing the reporting for this book. The members now routinely spend a day, sometimes two days a week—all the time, all year around, election year or no election year—on the telephone calling potential donors, pleading for money. It's a demeaning enterprise, and I think it has an impact on weaning out a lot of people who might consider running for Congress [but don't] once they find out they have to do this every week for the rest of their lives.

Kaiser made it clear that lawmakers, particularly members of the House who have to run for reelection every two years, are raising money, traveling, or attending campaign events so often than they only work about three days a week. Just another argument for public financing of campaigns.

Iraqi Family Sues Blackwater For War Crimes

Lawyers representing the widow and two children of an Iraqi vice-presidential guard allegedly murdered by a drunken Blackwater contractor filed suit today in a California court, charging Blackwater (recently renamed "Xe") with war crimes, assault and battery, wrongful death, and evidence tampering. The plaintiffs contend that security contractor Andrew Moonen got drunk at a 2006 Christmas party in the Green Zone, stumbled off and got lost, and then fired shots at 32-year old Raheem Khalaf Sa'adoon, a security guard for Iraqi Vice President Adel Raheem Khalaf, "killing him for no reason."

In a press release announcing the lawsuit, plaintiff attorney Susan Burke describes the shooting as "part of a pattern of illegal Xe-Blackwater shootings around the globe," while her colleague William Gould says that "Blackwater's clever new name cannot obscure the legal consequences of the company's use of excessive and deadly force on innocents."

For a timeline of Blackwater's activities in Iraq, click here.

Happy New Year

President Obama, showing his command of YouTube once again, wishes the Iranian people a happy Nowruz:

So in this season of new beginnings I would like to speak clearly to Iran's leaders.  We have serious differences that have grown over time.  My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community.  This process will not be advanced by threats.  We seek instead engagement that is honest and grounded in mutual respect.

You, too, have a choice.  The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations.  You have that right — but it comes with real responsibilities, and that place cannot be reached through terror or arms, but rather through peaceful actions that demonstrate the true greatness of the Iranian people and civilization.  And the measure of that greatness is not the capacity to destroy, it is your demonstrated ability to build and create.

Unsurprisingly, the initial reaction from Iranian leaders wasn't very enthusiastic.  But it's still a constructive gesture.  Symbols matter, and they make the substance a little easier to address when the time comes to talk substance.  I just hope they got the Persian subtitles right.

Taxing the Bonuses

This is a little embarrassing to admit, but by yesterday I'd gotten so tired of the AIG story that I barely even noticed the details of the House bill to claw back all the bonuses.  But it's a monster.  Taxing the million-dollar bonuses is one thing — I may be a little ambivalent about that, but overall I don't think it's all that problematic — but the bill that passed last night taxes away bonuses from anyone with a household income over $250,000.  That's a couple of mid-level analysts.  This is likely to hit tens of thousands of fairly ordinary workers who had nothing to do with AIG's troubles and who simply don't deserve this kind of treatment.

A friend of mine who describes herself as "Marxist at heart" but has nonetheless been trying to convince me all along that the tax clawback idea is a horrific idea, points me to this article in the Post today about how AIG employees are reacting to the death threats and armed security guards in the parking lots:

A sense of fear hung in the room -- the palpable, unsettling kind that flashes across people's eyes. But there was anger, too. No one would express it publicly, of course. Who wants to hear a wealthy financier complain? And yet, within those walls off Danbury Road lies a deep sense of betrayal — first by their former colleagues, now by their elected leaders.

The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president.

"They've chosen to throw us under the bus," said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. "They have vilified us."

They say what is missing from this week's hysteria is perspective. The very handsome retention payments they received over the past week were set in motion early last year when the firm's former president, Joe Cassano, was on his way out the door. Financial Products was already running into trouble on its risky credit bets, and the year ahead looked grim. People were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster.

So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you'd get a lump payment in March 2009. Stick around through 2009, and you'll get paid through 2010. Almost all other forms of compensation — bonuses, deferred payments and the like -- have vanished.

"People are trying to do the right thing," the same Financial Products executive said. "Guys have worked their [tails] off to try to get value for the taxpayer. This isn't money that's being advanced to us. People have performed the work and done it exactly as we asked them to do."

I don't know what the Senate will do with the House language, but they simply can't leave it the way it is.  A high marginal rate on million-dollar bonuses at bankrupt companies is one thing, but putting huge swathes of their professional staff in the same boat is another.  If this is where populist outrage is taking us, it's time for a timeout.

Now This is Sisterhood

Remember the Pakistani woman ordered gang-raped in 2002 because her brother had improper relations with a girl from another clan? Never mind that even that heinous justification was a frame job meant to hide the fact that he'd been gang-raped by that other clan—check this out.

Not only has this sister refused to commit suicide like most rape victims due to the associated stigma. Not only did she press charges and go on to live a very public life in which "she runs several schools, an ambulance service and women's aid group while having written an autobiography. By marrying, she has defeated another stigma against rape victims" who live as outcasts. Until they kill themselves.  That's right-I'm applauding her for marrying. As a second wife, no less. Well, I'm not applauding her for marrying (unless it was her choice) but for why and how she married.

From the NYT:

Mr. Gabol [her new husband] was one of a group of police officers deployed to protect her after she was threatened by the rapists’ relatives to try to stop her from pressing charges.
Mr. Gabol had a hard time persuading Ms. Mukhtar to marry. He had been calling her off and on since 2003 but formally proposed a year and a half ago, she said. "But I told my parents I don't want to get married."
Finally, four months ago, he tried to kill himself by taking sleeping pills. "The morning after he attempted suicide, his wife and parents met my parents but I still refused," Ms. Mukhtar said...Mr. Gabol then threatened to divorce his first wife, Shumaila. Ms. Shumaila, along with Mr. Gabol’s parents and sisters, tried to talk Ms. Mukhtar into marrying him, taking on the status of second wife. In Pakistan, a man can legally have up to four wives. It was her concern about Ms. Shumaila, Ms. Mukhtar said, that moved her to relent.
I am a woman and can understand the pain and difficulties faced by another woman," Ms. Mukhtar said. "She is a good woman."
In the end, Ms. Mukhtar put a few conditions on Mr. Gabol. He had to transfer the ownership of his ancestral house to his first wife, agree to give her a plot of land and a monthly stipend of roughly $125.
Asked if she had plans to leave her village to live with her husband in his village, Ms. Mukhtar said no. "I have seen pain and happiness in Meerwala. I cannot think of leaving this place." Her husband, she said, "can come here whenever he wants and finds it convenient."

Something tells me he better not be expecting to get any.

One Way to Avoid the Stimulus Bill's Bonus Loophole...

The Sunlight Foundation points out that if Congress wants to avoid unpleasant surprises about Wall Street bonus loopholes in federal legislation, a good way to start would be to give lawmakers, the public, and watchdog groups 72 hours to read a bill before lawmakers have to vote on it. I agree. Seems like common sense, no?

Unleash the Fed?

Over at our main site, James Ridgeway remarks that "the Federal Reserve seems to be catching remarkably little blame for the current economic crisis."  This doesn't surprise me.  After all, in a lot of ways the Fed seems to be practically the only institution in Washington actually capable of taking dramatic action these days.  And something is better than nothing.

More interestingly, James points to a Nation piece by William Greider, a longtime Fed watcher, in which he climbs down slightly from some of his previous criticisms.  It's not that he suddenly thinks the Fed is doing a good job, but drawing on the work of progressive economist Jane D'Arista he suggests that part of the problem is that the Fed now has too little authority:

When deregulation began nearly thirty years ago, some leading Fed governors, including [Paul] Volcker, were aware that it would weaken the Fed's hand, and they grumbled privately. The 1980 repeal of interest-rate limits meant the central bank would have to apply the brakes longer and harder to get any response from credit markets. "The only restraining influence you have left is interest rates," one influential governor complained to me, "restraint that works ultimately by bankrupting the customer."

....The central bank was undermined more gravely by further deregulation, which encouraged the migration of lending functions from traditional bank loans to market securities, like the bundled mortgage securities that are now rotten assets....In 1977 commercial banks held 56 percent of all financial assets. By 2007 the banking share had fallen to 24 percent.

The shrinkage meant the Fed was trying to control credit through a much smaller base of lending institutions. It failed utterly.

The problem, D'Arista argues, is that the Fed's control of short-term interest rates has less and less effect on long-term interest rates as the money supply moves outside the traditional banking system.  And fixed capital adequacy requirements, which require banks to slam the brakes on lending during bad times, make things even worse.

Read the whole thing.  I don't have the chops to fully evaluate what she says, but it's an intriguing argument and I'd be interested in hearing reaction from other blogospheric economists.  It's something to think about once we've put out the immediate fire.

Financial crises have a way of exposing the real structures of economic and political power. The current “big mess”—as the White House has taken to calling the worst economic disaster since the Great Depression—has revealed, among other things, the monstrous power of the Federal Reserve.

I’ve never put much stock in conspiracy theories that posited "shadow governments” pulling the strings behind the scenes. But the Fed is as close as it gets. While we focus all our attention on our elected government—the Democrats and Republicans who fight it out over how much to spend on the stimulus package—the Federal Reserve goes on operating behind closed doors, making financial decisions that could make the stimulus look like chump change.

The Fed’s power was abundantly clear on Wednesday: While the politicians, the press, and the public remained riveted on the battle over a few hundred million in AIG bonuses (which the Fed, it turns out, knew all about months ago, and didn’t bother telling the president), the Federal Reserve decided on its own to pump $1 trillion into the economy—nearly doubling all its previous cash injections. This is accomplished, as the New York Times points out, by “creating vast sums of money out of thin air.” And that’s not just a figure of speech: The privately owned banks that more or less run the Fed are helping themselves to $1 trillion plus by printing new money.

Indispensable?

Is it really true that the traders who created AIG's CDS mess in the first place are also the only ones with the knowledge to unwind it successfully?  Do we really need to pay millions of dollars to keep them around?  Simon Johnson, who certainly has the experience to know, says no:

If A.I.G. wants to argue that complex transactions, hedging positions and counterparty relationships require employees who are intimately familiar with those trades, it should at least provide evidence that the arguments for doing so are sounder than the ones made in Indonesia in 1997, when leading bank-owning conglomerates claimed that only they understood their financing arrangements, which certainly were complex. Or the Russian bankers in 1998 who were convinced that only they and their friends could possibly close the deals that they had taken on. We heard variants of the same idea in Poland in 1990, Ukraine in 1994 (and in the Ukrainian crises subsequently), and Argentina in 2002.

Any grain of truth in these arguments must be weighed against the costs of allowing discredited insiders to manage institutions after they have blown them up. Even if the conclusion is that a few experts need to be retained, offering guaranteed bonuses to virtually the entire operation is hardly the way to achieve the desired results. We should not let people think that the best way to guarantee job security is to lose lots of money in a really complicated way.

Charles de Gaulle said it best: “The cemeteries of the world are full of indispensable men.”  If the current crew isn't willing to work for anything less than a million bucks a year, I doubt that AIG will have much trouble replacing them with someone who will.

March Really Madness

The Big Dance started today. The week has been a frantic rush to fill out brackets, to winnow 128 teams (there's also a women's tourney going on, people) down to the champions come April. For a break from the careening Dow, people will glue themselves to their screens throughout the weekend watching young athletes try to make up for their schools lost endowments by getting deeper and deeper into the tournament. We'll all hope for a Cinderella story to cling to, to help us believe that miracles are possible. I once played in the dance (and two years later my team made history by being the only #16 seed to ever beat a #1) and for a long time I watched every second of every game, till I wanted to stab Dick Vitale's eyes out (there's only so much Dickie V. one can take). These days I'm more distracted, and much less enamored with the ritual, since it's more commercial than collegial. I'm sure I'll still shed a tear come One Shining Moment (I always do), but for now I am keeping my distance from the sports bars.

If you are too, or if you're a tourney junkie who can't get enough, there's still more fun with  brackets to be had. Check out this Bracket of Evil. Credo Mobile's creation is more of a Sour Sixteen, but it's still fun to consider who's more vile, Ann Coulter or Fox News, AIG or Blackwater? Pick your winners (losers?) and those with the most votes move on to the next round. One glaring omission is Dick Cheney, but that's likely because he'd win the whole thing in a blowout.