Conservatives and many moderates like to scream for tax cuts for the wealthy and businesses when the economy turns sour. Then they argue for even more tax cuts – or at least no tax increases – when the economy is strong so that growth does not slow. The premise is simple: If the people who create jobs have more money, then they can create even more jobs. As the economy grows, tax revenues grow, allowing the government to cut tax rates while taking in at least as much money in revenues. This is the theory of supply-side economics, “trickle down” economics, or as presidential candidate George HW Bush famously called it in 1980, “voodoo economics.”
The typical liberal retort says that the tax cuts pushed by George W. Bush first came into effect in 2001 and if we have been giving all this money to the wealthy and corporations, then where have the jobs been for the last decade? The other argument is that the economy boomed under higher tax rates during the Bill Clinton years. While these arguments can provide a bit of smug self-satisfaction, they are naïve. In short, it does not take into account the reality of supply and demand that actually drives economic growth.
Liberals tend to push Keynesian economic theories of increased government spending to create jobs. Unfortunately, once government stimulus spending dries up, such jobs are likely to disappear while budget deficits increase.
It’s not so much that both supply-side theory and Keynesian theories are both wrong. It would be more accurate to say that both are half right for the wrong reasons. While elected officials at every level of government fall over themselves to cut corporate taxes and tax rates on the upper class or spend money to stimulate the economy, they completely miss the real problem.
The problem is that there is no guarantee that any given tax cut or spending increase will automatically grow the tax base. It will make conservatives cringe to read this, but corporate tax cuts intended to create jobs – and let’s face it, that is the part of the economy most people care about – need to come with strings attached. On the other side of the argument, stimulus-type spending is the not the whole solution either. Both solutions need to be targeted so that they actually create good, sustainable jobs. In other words, we would need more regulations if such fiscal policies are to work.
Supply-side economics theorists play a dangerous game, which seems sort of out of character for self-described “conservatives.” If economic growth does follow corporate tax cuts, it is difficult to prove the extra money for investment was the cause of that growth. Indeed, more often the cause is directly related to increased demand in the natural cycle of markets. When economic growth does not follow tax cuts, budget deficits tend to appear, which adds debt and the accompanying interest payments. Naturally, supporters of more government spending face the same charge. If government spending does not create sustainable jobs, the deficits and debts do not go away and economic stimulus money was wasted.
The two recent two-term, supply-side presidents governed during increased military spending – Reagan to challenge the Soviet Union to an arms races and Bush 43 to wage wars in Iraq and Afghanistan. Still, there is evidence that tax cuts under neither Reagan nor Bush were particularly successful in creating well-paying jobs (outside of the military-industrial complex) by cutting taxes. In the same vein it is not entirely honest to give credit to Clinton for job growth in the 1990s when many of the jobs were created by the tech bubble. That economic bubble burst when too many pseudo-entrepreneurs thought all it took was a few websites to become instant millionaires. Too many investors bought into business schemes that had no plan to do anything basic like show a profit. One only needs to remember the dot com advertisements during the 2000 Super Bowl to recall the folly of those days.
Recently, the economy has shown signs of recovery, but it is hard to show the fiscal policy influence. On one hand is this report from the Pittsburgh Post-Gazette discussing increasing investment in domestic manufacturing. This is in line with a Center for American Progress report that blames a lack of investment for many of the country’s economic woes even as corporate profits are hitting record highs. (The caveats are that not all businessesare seeing those profits and many businesses are still nervous about the direction of the economy and unwilling to add new jobs yet.)
On the other hand is this report from Mother Jones noting that much of the recent job growth can be attributed to low-paying, dead-end jobs. Such jobs are often called McJobs, a term that first appeared in 1986 and was popularized in Douglas Copeland’s novel Generation X: Tales for an Accelerated Culture. The term refers to service-sector jobs like those at the fast food restaurant, McDonalds. Indeed, the hook of the Mother Jones article is a recent hiring spree by McDonalds. The company hired 62,000 new employees on one day, but received 938,000 applications, or an acceptance rate of 6.2 percent, for mostly low-paying jobs with little opportunity for advancement.
It is pointless to attack McDonalds for this situation. For one thing, there is little reason to expect the company to pay their employees $25 an hour. It’s not like it takes an engineering degree to slap together a cheeseburger (trust me, I once held a McJob). For another thing, one cannot honestly slam the company for only hiring 6.2 percent of the applicants. The executives projected needing 62,000 employees not 938,000. There might be increased demand for $5 fast food meals, but not that much more demand.
What we are really talking about is the logical connection between government action and the economy. In free market economies (as contrasted with centrally-planned economies like China and Cuba), the government can only control the economy through monetary or fiscal policy. Monetary policy in the United States generally centers on the actions of the Federal Reserve Board (also known as the Fed). There is little that the Fed can do right now considering the main mechanism they use to spur growth is to lower the discount rate and that is already incredibly low despite a small increase in February.
In contrast, fiscal policyrefers to actions the government takes on taxation and public spending. Supply-side economics focuses on the taxing side while Keynesian economics focuses more on the spending side. Conservatives argue supply-side by noting that individuals and corporations can circulate more wealth when the state does not step in and take some of the wealth to redistribute. Supporters of Keynesian economics note that the failure of the private market to actually circulate wealth in bad economic times exacerbates economic problems. Consequentially, the state needs to step in and “prime the pump” by spending money to spur economic growth.
The frustration with the underlying assumptions about Keynesian theory is understandable. There is not much reason to assume that the government will be any more successful in creating economic growth than the private market. Additionally, taxation essentially forces people to turn over their wealth and they expect it to be spent wisely on only necessary programs. There is a logical disconnect between demanding the government, specifically the president and congress, do something about the economy while arguing against government spending.
Still, government spending does indeed create jobs whether they are on public works projects like repairing roads and building parks or on routine contracted work. The problem here is that the jobs are likely to disappear with the end of the government funding. Either this is only a temporary solution or the government has to continue spending (and presumably taxing) at higher levels. Neither outcome is particularly desirable.
But whether we are talking about tax decreases or direct spending, the problem is that there is almost no oversight at the federal level (and often at the state level) to ensure that all of this spending actually creates jobs. In fairness, President Barack Obama did order federal agencies to track spending of the stimulus money and made such data public. However, such oversight is sorely lacking from tax breaks on the wealthy and corporations.
The solution to this debate is quite simple, but would require both sides to give some ideological ground. First, we have to accept the notion that neither tax cuts nor government spending automatically create well-paying, sustainable jobs. The evidence from the Great Depression through the current recovery makes that clear.
Next both sides have to agree that both approaches have some merit. It matters little if individuals and businesses have extra money due to lower taxes or government spending. The point is they have the extra money. Getting them to spend the money to generate economic activity is the key. Admittedly the economy does get a small boost when individuals save money, but it is devastating when businesses refuse to reinvest profits and bonus money from tax breaks.
So the solution is to make tax cuts for corporations and the wealthiest people targeted to those who will actually create jobs. This should not be thought of as a reward to those who do create jobs nor as a punishment to those who do not. Any taxpayer-funded benefits, whether through tax breaks or spending, need to go directly to job creation, not lining CEO pockets.
In my home state of Pennsylvania, the Department of Community and Economic Development runs a number of programs to assist businesses that want to add jobs. In fact, there are so many different programs that several years ago the state created a single application for all grant and loan programs for businesses in order to streamline the process. The caveat is that only those applicants who are most likely to actually create jobs receive assistance. It is a simple and elegant process and one that the federal government should consider.
Instead of cutting taxes willy-nilly and dumping billions of borrowed dollars into the economy, Congress and the president should empower the Small Business Administration (SBA) to significantly expand its business loan and grant. Furthermore, SBA should have an auditing process to ensure that recipients actually created jobs.
Moreover, this needs to be a sustained effort rather than one that only crops up when the economy sours. It is simply unworkable to do economic development in fits and starts. If our elected officials have decided that the government has a role to play in creating jobs and sustaining the economy, then they need to make a long-term commitment to job creation rather than treating every economic downturn as a brand new crisis.
The other part of the solution is to amend the tax code so that corporations and businesses large and small receive tax incentives only when they show that they have or will create jobs in the United States. Such tax incentives could even be tied to the amount of income taxes paid by their employees to discourage companies from taking tax breaks for creating nothing but McJobs. Again, this must be a long-term, sustained effort rather than a periodic response to market downturns coupled with an effective auditing process.
Unfortunately, ideology and the short-sightedness of modern politics probably means that this little solution is a non-starter.
Government Regulations are never an answer to economic growth, just ask the oil industry about that. We can't even drill our own oil because of it. Also it's high taxes and regulations along with union greed that have sent our jobs overseas. Add to that the illegal immigrants who are given jobs by employers ( their fault ) that american are willing to do contrary to the popular opinion ( propoganda ) of the liberal press. We need a flat tax based on different income levels. Lower percentage on the poor and higher on the wealthy. For example a flat tax of 5% for the poor and 25% on the wealthy and everything in between. Get rid of all the deductions and loopholes. We could downsize the IRS everyone would know exactly how much they are going to pay in taxes for a given income and the government should know exactly how much their tax revenues will be and can then budget according to income like the rest of America does. That way there is less government involvement in business, we could downsize different government agencies who have their noses stuck in business with all their regulations. And people would spend more at the same time. We also need to quit sending so much money to foreign countries who hate our guts. We send billions upon billions to countries that are known to hate us but of course for a few billion a year they will kiss our ass and tell us what we want to hear while they plot how to destroy us. That's insanity ! Liberals and Conservatives alike are dumb and dumber for bitching about too much tax or too litttle taxes while they approve sending billions in aid to foreign countries to protect " our interests". What interests do we really have anymore in the world other than with our allies ? It's a well know fact that we have so much oil in buried in this country off shore and on shore that we could tell the middle east to kiss off and be done with them. We also need to address the union problem of greed. It's one thing to want a good wage, its another thing to nearly bankrupt companies due to union benefits. There's one last thing that no one ever addresses in economics and that no one can really control except the individuals themselves both government and citizen alike, and that's the issue of greed. Uncontrolled greed in every part of society will eventually ruin any economy.
The federal government seems riddled in recent years with near shutdowns as Democrats and Republicans temporary spending bills. As with nearly everything related to the government, there is a big disconnect between how things should run and how they actually run.
How it should work
The key date to keep in mind as you read this post is Oct. 1. That is the beginning of the federal government’s fiscal year. If a budget – a series of laws directing federal government spending – is not in place by Oct. 1, then the government may not spend money. The federal budget is typically comprised of a dozen or more different appropriations laws, meaning that some parts of the government could operate while others shut down.
The federal budget process is governed by the 1974 Congressional Budget and Impoundment Control Act (the Budget Act) and subsequent amendments. Prior to the Budget Act, Congress had to vote separately on all spending with little in the way of a spending and revenue plan. The Budget Act also created the Congressional Budget Office (CBO), one of a very few Legislative Branch agencies, to give lawmakers non-partisan analyses of proposed legislation. The president has a similar office called the Office of Management and Budget (OMB), originally called the budget office when it was created in 1921.
The president, OMB and the Cabinet members – those people who serve as the head of the various parts of the Executive Branch bureaucracy – start thinking about their budgets in the fall. During the fall of 2011, they will be thinking about the FY 2013, which starts Oct. 1, 2012. In a series of meetings, the president develops a set of spending priorities, including major funding and defunding initiatives, for each of the departments of the federal government. This is an important agenda setting power as it outlines a general view of what the president will accept (i.e. not veto).
In late January or early February, the president gives the (somewhat) constitutionally-mandated State of the Union Address. Recent presidents have used the address to outline their spending priorities for the coming fiscal year. Arguably, this is little more than political theatre. The real action happens within a day or two when printed copies of the president’s budget proposal are released. This makes an annual photo op for the newspapers and television news as aides distribute huge tomes detailing a spending plan for every dollar in federal spending. However, with modern technology, the president’s budget proposal is now available as a .pdf and a free download for e-readers. The FY 2012 budget proposal is available here.
After this, the House and Senate Budget committees prepare their own budget resolutions. Much like the president’s budget proposal, legislators work on creating these resolutions for months behind the scenes. Depending on control of Congress and its relationship with the president, the budget resolutions could be very close to the president’s proposal or radically different. Rep. Paul Ryan’s much ballyhooed and maligned “Pathway to Prosperity” is a proposed budget resolution. In reality, budget resolutions are usually not such major news.
In any event, both houses have a chance to pass their own budget resolution and these could be similar or radically different depending on the party control of the two chambers. These budget resolutions are not laws and do not require concurrence of the other house or the president’s signature. Instead, they become “rules” of the chamber. In essence, it is difficult, though not impossible, for the chamber to pass a final budget in excess of the numbers offered in the budget resolution. Like the president’s budget proposal, the budget resolutions are statements of each chambers’ funding priorities. In other words, in a typical budget year, there are three documents outlining the budget agendas of the various branches of government.
After each house has passed a budget resolution, the respective House and Senate Appropriations committees begin their work. Using the budget resolution as a baseline, these committees decide exactly how the money will be spent. Each appropriations committee has a dozen subcommittees that work on various parts of the appropriations such as defense, homeland security, environment and agriculture. These committees develop 13 appropriations bills. Ideally, each would pass before Oct. 1 and the president would sign them.
In recent years, Congress has fairly consistently failed to pass the 13 appropriations bills by Oct. 1 and quite often has not passed any of the 13 by that deadline. Oct. 1 is not some magical date on which the government suddenly has money to spend. Indeed, during the latest budget crisis, the federal government had plenty of money to meet its obligations. However, the federal government must have specific authorization to spend taxpayer money. Theoretically, any part of the government that does not have authorization to spend money shuts down. In reality, during a shutdown the bare minimum operations continue. For example, U.S. soldiers would still get fed, but they might not get paid until an appropriations bill passes.
One solution is the continuing resolution, often referred to as “stopgap” measures in the U.S. media. A so-called “clean” continuing resolution authorizes spending at current levels, meaning no increases or reductions in spending limits. The intent is to allow Congress more time to pass an appropriations bill.
The reason the government came perilously close to a shutdown last Friday was largely that the continuing resolution offered by the House was not “clean.” The House version included numerous “riders.” These riders would have defunded a number of initiatives favored by progressives and moderates. Had it passed intact, the continuing resolution would have defunded a number of women’s health care programs including appropriations to Planned Parenthood. It would have also prohibited the Environmental Protection Agency (EPA) from taking climate change into consideration when setting regulations and shutdown other environmental programs. When it ultimately passed, the continuing resolution still contained other controversial measures. For example, it removed wolves from the endangered species list. It also included restrictions on the District of Columbia and the Mayor Vincent C. Grey and several members of the city council were arrested Monday during a protest over the riders. The resolution prohibits DC from using its own tax revenue to fund abortions for poor women and revives a divisive school voucher program.
The current problem is that the Oct. 1, 2010 deadline sailed by with no appropriations bills passed at all by the Senate. Despite overwhelming Democratic control in that chamber before the midterm election, Democrats were divided over funding levels and had difficulty finding Republican votes for any appropriations bill. The Senate effectively needs 60 votes to pass most bills. Congress passed a series of continuing resolutions that have funded the government through Friday, April 15 and there is a deal in the works to fund the government at FY 2010 levels through Sept. 30, 2011.
Could a spending bill have passed while the Democrats still held 59 seats in the Senate? The short answer is “probably.” Talking Points Memo reported in December that nine Senate Republicans reneged on a promise to support an omnibus budget totaling $1.108 trillion, essentially rendering moot a year of Senate negotiations and the House’s work on appropriations.
In December, an omnibus spending bill was on the table in the Senate. An omnibus combines numerous bills into a single bill. Such a large bill will almost invariably contain provisions that individual members may object to, but the overall bill may be acceptable. The problem that members face with omnibus bills is that they are often “must pass” bills like the December omnibus. While the majority of such an omnibus may be worthwhile, political opponents can almost always find provisions in such a bill to use as fodder for political ads at reelection time. On the other hand, members can claim they had to vote for an omnibus bill in order to pass a budget in spite of objectionable provisions.
Another problem with omnibus bills is that they are invariably long and often await action close to a deadline, such as the looming end of the 111th Congress. December’s bill ran more than 1,900 pages and Republicans mocked the sheer size, questioning whether anyone could actually read it. Of course, that ignores the fact that the omnibus was the result of nearly a year of work and did not appear from out of nowhere. Still, this opens members to attacks that they passed a bill without knowing what was it contained.
This is a quite simple rundown of the federal budget process. It does not include issues such as earmarks, impoundment and reconciliation nor does it address the sometimes arcane and confusing rules of each chamber. Neither does it address the constitutional status of the state of the union address. I will discuss these issues in future posts.
Mention the word “lobbyist,” “interest group” or “political action committee” to an average voter and many will make a negative if rather vague connection. The reality is that the national and every state capital have influence industries that try to direct opinions about public policy and political candidates.
This influence industry also serves as a convenient political punching bag as candidates run for office as “outsiders.” Decoding these groups is a good place to start in understanding the political messages Americans receive from politicians and the media.
It is important to understand three key points about communications and messaging. First, the media don’t necessarily tell us how to think. They tell us what to think about. If the influence peddlers don’t want most people to think about marijuana legalization, for example, they won’t discuss it. Granted, some people make a very comfortable living for simply writing their opinions and running them in newspapers or blogs, but even they are setting the agenda. If you don’t agree with Michelle Malkin or Thom Hartmann, they are still getting you to think about the issues they are discussing.
The second key point to keep in mind is that money buys influence. It costs money to buy airtime on TV, radio and the internet. It costs money to hire an army of experts to put out reports. And yes, sometimes bribes cost money, too. But let’s think positive because such overt corruption is actually relatively rare for the sheer about influence peddling that goes on.
The final point is that politics can be seen as a pattern of two primary cycles. One is the campaign where two or more people try to convince you to 1) go out and vote and 2) preferably vote for him or her. The other cycle is lobbying. The term “lobbying” has received a bad name over the years, thanks in no small part to the Jack Abramoff scandal. When I use the term, I am generally referring to political insiders. However, citizens can and do lobby their representatives when they call the office, write a letter to the editor or participate in a rally. If a representative thinks that a majority of voters support one policy over another that can be enough to get him or her to ignore the insider lobbyists.
There are a number of different types of interest groups that exist in the United States. For tax and regulatory purposes, the influence industry has evolved into its current form. However, they all have the same goal – to get you to support or oppose a policy or candidate. This post will look at the key players in the influence game. This will primarily focus on Washington, DC and national politics, but similar groups exist in every state capital and many groups are based in other major cities. It is also important to note that many organizations engage in multiple forms of influencing.
The entire lobbying and influence industry falls into the category of “interest groups.” These range from the well known organizations like the Sierra Club, People for the Ethical Treatment of Animals (PETA) and the American Medical Association to much lesser known groups. By any chance, are you affiliated with a college of Art and Design? There’s an interest group for that. Live in Texas? There’s an interest group for that. Do you own a convenience store? There’s an interest group for that.
For better or worse, the federal government’s role in regulation and appropriating money has grown exponentially since the New Deal of the 1930s. Some regulations are the result of tragedies while others are designed to minimize the risk of future tragedies. Federal spending is meant to address market failures as John Maynard Keynes argued during the Great Depression. People have a stake in these decisions and form interest groups to fight for their common interests. The convenience store interest group, for example, is fighting for reforms in charges associated with swiping debit cards because that has a direct impact on their businesses.
Whether the government goes too far in regulating or appropriating is irrelevant to this discussion. The reality is this happens in Washington and it affects industry, the environment and education. Pretty much any aspect of American life that can be affected by federal policy has an organization with a presence in DC or the suburbs of Maryland or northern Virginia.
Lobbyists have a poor reputation. As a profession, they might rank somewhere between organized crime and professional pickpockets on the public perception scale. Politicians have been running against the “lobbyists” for decades and the Jack Abramoff scandal changed the word from a nebulous threat to democracy to a very real evil plastered on the news for months.
The reality is that there are a lot of lobbyists in Washington and the state capitals. The exact number of lobbyists in DC is subject to some spinning of numbers. One reason is that it is possible to engage in lobbying activities without actually registering as a lobbyist. Another reason is that lobbyists will often have reason to register multiple times. One story in the Washington Post in 2005 (at the height of the Abramoff scandal) cited a figure of 34,750 lobbyists, double the number from five years previous. In contrast, the Center for Responsive Politics (CRP) set the actual number of registered lobbyist actively working in lobbying in 2005 at 14,075. By 2010, that figure had dropped to 12,985.
The reason we have any of those numbers is the 1995 Lobbying Disclosure Act and amendments of the 2007 Honest Leadership and Open Government Act. People who devote 20 percent or more of their billable time on federal lobbying activities must register with the Clerk of the House of Representatives and the Secretary of the Senate. There are also exemptions for organizations that devote small amounts of money (less than $10,000) to lobbying activities. Since registering as a lobbyist opens an individual’s financial records and professional activity to public scrutiny, many people are understandably reluctant to register. The loopholes, combined with the same individuals registering multiple times without previously deregistering, makes enumerating DC lobbyists a tricky business. On a side note, the amount spent on lobbying has steadily increased with no real correlation to the number of registered lobbyists. CRP estimates that lobbying accounted for $3.49 billion in spending in 2010.
At any rate, there are a lot of lobbyists in Washington and the state capitals. While all of them have an agenda – specifically to advance the interests of their employers – they also have a wealth of specialized knowledge. Legislators and executive branch officials often have to make policy decisions on rather obscure topics. Lobbyists and their support organizations study those topics and offer specialized expertise to government officials. Ideally, our officials seek out all sides of a policy debate – and by extension their advocates. Quite frankly, this is usually the case.
Unfortunately, not all advocates enjoy the same levels of access. This is where the corruption kicks in. In just one example, a lobbyist tied to the PMA scandal spent thousands of dollars entertaining certain members of the House Subcommittee on Defense Appropriations in an effort to win earmarks for his defense industry clients.
Finally, lobbyists are usually employed by interest groups, think tanks or actual lobbying organizations, or “lobby shops.” These lobby shops typically carry the names of principal members, much like a law firm. Many, like PMA noted above, focus on a specific industry. Others offer more generalized services. The common theme is that these lobby shops represent the interests of whoever can pay the bill.
Think tanks are a little different than interest groups and lobbyists. Often, they are large institutions working on a variety of issues at the same time. They employ teams of research experts to study current and emerging issues and issue reports to decision makers and the media. The ultimate goal is to get politicians and the media to report their findings and thus influence the public and government officials.
Most think tanks call themselves “non-partisan,” but that does not mean they don’t hold a particular point of view or ideology. This is for tax reasons as virtually all think tanks hold 501(c)(3) status. Donations to these think tanks are tax deductible, a major consideration for many donors. Consequentially, think tanks may not engage in political activities such as lobbying for a policy or campaigning for candidates. However, their reports have an uncanny tendency to come to a conclusion supporting the think tank’s stated ideology.
In order to get around the limitations on lobbying, think tanks form sister organizations that fall under 501(c)(4) of the tax code. While these sister organizations are still non-profits, donations are not tax deductible. This provision frees that part of the organization (and only that part) to lobby the government, publicly promote policy preferences, and ask supporters to contact their government officials. However, it also means the 501(c)(4) organization must keep its donations separate from the rest of the organization.
The best known national think tanks include the libertarian Cato Institute, the conservative Heritage Foundation, the business-friendly American Enterprise Institute, the liberal Center for American Progress, and the Brookings Institute, which has been classified as liberal, centrist and conservative at different times. (Disclosure: the author interned at the Center for American Progress.) The next time you hear a politician or media outlet mention a report by a certain think tank, do some research to understand the position of that organization. The results may surprise you.
Party organizations, 527s and PACs
Finally, no discussion of the influence industry would be complete without a discussion of organizations created to influence elections. In addition to the organizations listed below, full cottage industries exist in DC to provide specialized campaigning services such as creating direct mail pieces, producing political ads, conducting polling, researching candidates, and buying ad time on TV and radio. They all exist for one reason: to convince voters to vote for a particular candidate.
Both major parties have three main national campaigning organizations. The Democratic National Committee and the Republican National Committee exist to support federal candidates (President, House and Senate) for the respective parties. Leaders of these organizations are often prominent people who do not currently hold elected office. DNC chair Tim Kaine is the former governor of Virginia while RNC chair Reince Priebus is the former chair of the Wisconsin Republican Party and has never held elected office.
Additionally, The Democratic Congressional Campaign Committee (DCCC) and the National Republican Congressional Committee (NRCC) support House candidates while the Democratic Senatorial Campaign Committee (DSCC) and the National Republican Senatorial Campaign Committee (NRSC) support Senate candidates. Officers of those organizations are members of their respective chamber and party. Due to funding limits, the DCCC, DSCC, NRCC and NRSC tend to focus their efforts on races they project to be close. The organizations are currently chaired by Rep. Steve Israel (D-NY), Senator Patty Murray (D-WA), Rep. Pete Sessions (R-TX) and Senator John Cornyn (R-TX) respectively.
Another type of political organization is the political action committee (PAC). PACs are connected to organizations and elected officials. PACs may raise “hard money” to openly advocate for the election of specific candidates. Individuals may only donate a limited amount of money to federal PACs per year. The first PAC was created by the Congress of Industrial Organizations (the “CIO” in the labor union AFL-CIO) in 1944. The PAC allowed the CIO to circumvent a law forbidding unions from directly donating to candidates. Businesses followed suit by forming their own PACs to donate to pro-business candidates. Many prominent politicians have copied the practice and formed PACs to donate to other candidates. This is certainly a good way to curry favor with the party by supporting less well funded candidates.
Note: If that was too dense or too brief, here is Stephen Colbert announcing the formation his own PAC and here is Colbert talking with former chair of the Federal Elections Commission and election finance lawyer Trevor Potter. At the moment, ColbertPAC asks you for an email address before letting you explore the site further.
Finally, the complement to PACs is the so-called 527s, named for the relevant portion of the tax code. In contrast to PACs, 527s may raise unlimited amounts of “soft money.” Political organizations using soft money cannot directly advocate for the election or defeat of a specific candidate or donate to candidates. The transparency problem is that it is difficult to track soft money donations but their messages are all too clear. One of the best known 527s is Swift Boat Veterans for Truth, which attacked John Kerry’s military record during the 2004 election. Their advertisements never explicitly told voters to vote for George W. Bush or against Kerry, the message was clear. Additionally, 527s can use their soft money for other electioneering activities such as voter registration drives (obviously targeting likely sympathetic voters), conducting and releasing polls and get out the vote (GOTV) efforts. Importantly, federal law prohibits 527s from coordinating their activities with official campaign organizations.
The number of 527s grew substantially after the Bipartisan Campaign Reform Act (popularly known as the McCain-Feingold bill) of 2002 banned parties from soliciting or using soft money. However, it does not address other organizations using such funds. Consequentially, 527s may raise and spend unlimited amounts of soft money as long as they don’t use “magic words” endorsing a candidate or coordinating with a campaign. In the Swift Boat Veterans example, the organization helped the Bush campaign at Kerry’s expense and the Bush campaign was not responsible for the information. Of course, support from a 527 could just as easily backfire if voters are turned off by the messaging.
These organizations live and die by donations from the public, but there are some limits to the amount any one person can give and thus the amount of individual influence one person can exert from being “a major donor.” Federal law sets contribution limits and the Federal Elections Commission is responsible for tracking and enforcing donation limits. Some limits are adjusted in odd-number years (i.e. non-election years) to account for inflation. Individuals may give $5,000 to any one candidate – half for the primary and half for the general – and a total of $46,200 to all candidates. Individuals may also give $30,800 to a national party committee; $10,000 to state, district and local parties; and $5,000 to a PAC per year. Individuals are limited to giving a total of $70,800 to these organizations each year. Additionally, PACs and party committees face giving limits and the current chart is posted here. While the limits are intended to limit any one person’s influence in the electoral process, not many people have an extra $117,000 (not tax exempt) to give to campaigns. There are no limits on think-tank donations.
That is the Washington influence industry in a nutshell. While different laws apply at the state level, each state certainly has a similar influence industry. At the local level, citizen groups often form to advocate for or against policies of local governments and school boards. This is lobbying just as surely as the high-powered Washington lobbyists and you are allowed to do it under the protections of the First Amendment (specifically, freedoms of speech, assembly and petition for redress of grievances).
One of the first things my journalism professor told me in my freshman years was, “If you aren’t pissing someone off, then you are not doing your job.” One news network that you have probably rarely watched on the TV machine has been doing both.
In case you missed it, Al Jazeera is available on DirectTV and it does offer an online stream and a mobile stream. It just purchased Al Gore's Current TV. Why the sudden interest in this 15 year old media outlet that is largely funded by the royal family of Qatar? This is a channel that former Defense Secretary Donald Rumsfeld once accused of “vicious, inaccurate and inexcusable” reporting. This is also the channel that Osama bin Laden selected to receive his videotapes and AJE broadcast them. And that is really only the tip of the criticism iceberg.
The simple answer is that their outstanding coverage of the protests in the Arab world put the U.S. media to shame. Granted CNN’s Anderson Cooper did a solid job, even after getting beaten by Egyptian police. But the point is that the U.S. media were slow to respond. When the Egyptian protests erupted, AJE was on the ground while Cooper did not make it to Cairo until Jan. 31. Meanwhile, Al Jazeera’s reporters had their credentials revoked, their office closed down, their broadcasts interrupted and eventually government supporters torched the Cairo offices. Somehow, their reporters kept reporting, though the station often withheld their names and specific locations.
During the height of the Egyptian protests, AJE’s website saw a 2,500 percent increase in activity, 60 percent from the United States. Twitter was awash in breathless updates from Tahrir Square.
But Egypt was not the beginning of the story and this may explain why Al Jazeera knew to have reporters on the ground. More than a month earlier, protests in Tunisia hinted at the stirrings of a wider movement against entrenched dictators. Indeed, I personally saw a post via Twitter announcing Egypt’s Jan. 25 protests a full 24 hours early. (Meanwhile, the Pentagon was caught as flat-footed as the US media.)
In fact, Al Jazeera chief Wadhah Khanfar wrote a somewhat self serving, if pretty accurate piece that ran in the Washington Post on Sunday detailing why his channel started out so far ahead of the other outlets.
These unfolding transformations have been less of a surprise for us at al-Jazeera. Since our launch nearly 15 years ago, we have chosen to keep close to the Arab street, gauging its pulse and reflecting its aspirations. It was clear to us that a revolution was in the making, and it was happening far from the gaze of a tame and superficial establishment media that allied itself with the powerful center - on the assumption that the center is always safer and more important. Many media outlets in the region failed to recognize what was happening among the Arab grass roots. Keen to conduct interviews with high-level officials and ever willing to cover repetitious news conferences, they remained oblivious to what was happening on the ground.
In other words, AJE will give a voice to the plight of the Palestinians or the gripes of al Qaeda. Indeed, AJE’s perceived favoritism toward Hamas, for example, has cost the channel significant access within the Israeli government. Indeed, monitoring the channel, one can sometimes detect a hint of satisfaction when governments attack the messenger whether through harsh criticism, cutting off access or burning down offices. It’s all about pissing off the corrupt rulers. And perhaps it is more than mere coincidence that in the week before the beginning of the Egyptian protests, AJE was heavily focused on the Palestine Papers, a series of previously secret documents detailing negotiations in the Israeli-Palestinian peace talks.
But AJE’s new-found popularity may run deeper than just a handful of Americans wanting to watch chaos in foreign countries. To put it another way, is this a passing fad among the American left wing or could AJE actually capture a stable audience in the United States? Forbes asked this very question in 2009 when the channel debuted in the Washington DC market in 2009. According to this Reuters report about the spike in AJE news consumption during the early days of the Egyptian uprising, the channel’s potential television audience is 2.4 million. This assumes that every person with DirectTV as well as every cable subscriber in Washington, Toledo and Burlington watches AJE at the same time. In contrast, the web traffic numbers showed a US audience of 3.5 million. Additionally, AJE was able to deliver 13,000 emails from viewers requesting Comcast add the channel.
Clearly, the numbers are there. But that still begs the question of why US media consumers want alternative news sources. American news consumers are spoiled if you look on the surface. We have three 24-hour news networks and three 6:30 p.m. network broadcasts. CNN offers a separate Headline News and NBC offers CNBC. Current TV is about to get into the news business with Keith Olbermann at the helm. That does not even count morning shows like Good Morning America, the Sunday talk shows or the many talk radio offerings as well as newspapers. The problem is that the quality of these offerings is severely limited. Here is a damning critique of CNN showing that station’s alleged fascination with soft news and this is my 2008 critique of Headline News that turned me off to the station forever. MSNBC largely focuses on domestic politics while Fox is firmly biased to the right.
As for the networks, 30 minutes including commercials are hardly enough to get sufficient analysis. Indeed, most American need to turn to a half hour BBC broadcast on PBS or an hour on BBC America for more than a passing mention of events in other countries. All of that assumes that a given viewer can invest that time at that precise hour to get their news. Some Americans are clearly fed up with the domestic offerings and want alternatives. AJE wants to be offered by Comcast. It remains to be seen if Comcast cares enough to make the channel available to Americans.
Finally, this debate would not be complete without the knee-jerk Islamophobics threatening to boycott Comcast if they add Comcast to the lineup. Cliff Kincaid, director of the right-wing Accuracy In Media, wrote a piece titled How Al-Jazeera Kills Americans. Kincaid offers exactly zero examples of violence directly inspired by al Jazeera or any other Arabian news outlets. He does make a tenuous connection between the network’s criticism of the Iraq and Afghanistan invasions, connections which sound suspiciously familiar to the efforts by the Bush administration to question the patriotism of domestic anti-war activists. The argument, of course, is that any dissention of US war policy somehow puts US soldiers directly in danger. (And we are left to wonder how many soldiers Geraldo Rivera put at risk when he drew a map in the sand on live television showing troop positions during the Iraq invasion.)
Kincaid also poses the obvious question, “Could its increased presence in U.S. media markets spark more terrorism on American soil from home-grown Jihadists?” That’s a pretty dumb question, really. One could ask, “Does right-wing rhetoric encourage violence?” The answer, by the way, is yes. The point is not that the American right is the only ones who inspire violence. The point is that any number of perspectives can inspire violence. We don’t censor Law and Order SVU because some violent pervert might get ideas. If we did that, the only programming on TV would be Sponge Bob Square Pants… at least until the grisly discovery of seven bodies in a giant pineapple under the sea.
And there is also the vox populi. On this Comcast online forum, the original poster threatens to cancel his/her service and predicts millions other will to if the cable company adds AJE. This person has clearly bought into the anti-Arab and anti-Islam propaganda and the subsequent posters say as much. At any rate, the reasoning in this post is the same as the following argument.
My doctor tells me I am allergic to shrimp even though I have never eaten shellfish in my life, in keeping with the teachings of Leviticus 11:10-12. Red Lobster serves shellfish. Therefore nobody should be allowed to eat at Red Lobster lest they get sick and/or go afoul of God’s law.
Besides, there’s nothing quite so patriotic and in the spirit of the First Amendment than trying to stop Americans from watching alternative news.
About the Author: Chris McGann is a once and (probably) future journalist and blogger on Daily Kos and Progressive Electorate. He has worked as a non-partisan small town reporter, public relations writer, Tweeter for a liberal DC think tank, waiter, burger flipper, cell phone salesman, tutor and a bunch of other things to pay the bills. Did we mention he also has a Master's Degree in applied politics? There's that, too. He lives in Harrisburg, Pa.
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