Congress Clouds the Already Weak Transparency of the STOCK Act; Updated

At the end of last week without even a vote, both the House and the Senate approved a repeal of a portion of the STOCK Act.  The STOCK Act, signed into law last Spring, is a transparency and ethics law aimed primarily at Congress and their staff. The law requires those individuals to disclose their conflicts of interests (such as stock purchases) and  prohibits the use of non-public information for private profit. However, the bill also applies to many higher ranking federal employees as well. With the repeal of the portion of this bill (if signed by the President),  two components of transparency will become opaque, as detailed by the Sunshine Foundation (emphasis added):

The bill enacted last year would require already public financial disclosures of senior congressional and executive branch officials to be put online in order to prevent or root out insider trading. There were concerns that some provisions of the bill were overbroad and would put some government employees at risk. Rather than craft narrow exemptions, or even delay implementation until proper protections could be created, the Senate decided instead to exclude legislative and executive staffers from the online disclosure requirements.  

 The sweeping exemption goes even farther than critics of the disclosure requirements requested. For those to whom online disclosure would still apply (the president, vice president, members of Congress, congressional candidates and individuals subject to Senate confirmation) the Senate bill made electronic filing of the information optional and struck the requirement that online information be searchable, sortable and downloadable, making even the disclosures that remain in the bill tepid and relatively unusable.  

Even prior to the aforementioned legislation, implementation of the STOCK Act had already been delayed multiple times. Additionally, the bill was not even available for public consumption on the  Library of Congress website until after the measure was approved by Congress. Imagine that--a bill that would repeal transparency passed through Congress in a non-transparent manner.

In today's data-driven, information age, if such government information is not online, it is essentially useless to the American public. How will constituents be able to hold their leaders and their leaders' staff accountable if such information in not available online? If such online disclosure is merely optional, there is little motivation for politicians to be voluntarily transparent.

The STOCK Act was the ultimately a hybrid of two bills proposed by Republican Senator Scott Brown and Democratic Senator Kirsten Gillibrand. When the STOCK Act was being discussed in Congress, Governor Sarah Palin called the bill " particularly weak" because they did not require Congress to disclose their stock purchase or trades immediately. Governor Palin supported a more stringent bill from Congressman Sean Duffy,which would have required all Congressmen to create blind trusts or disclose stock trades within three days. Duffy's bill never made it out of committee.

The research and work of Peter Schweizer led to such legislation being seriously considered at all. Legislation banning insider trading never got any traction until Schweizer's book Throw Them All Out was released in 2011. Schweizer called the passage of the STOCK Act a "victory", but noted that the bill did not go "nearly far enough to deal with the problems of cronyism and corruption that we face."

What must Governor Palin and Peter Schweizer think of the non-transparent weakening of an already weak bill?

The STOCK Act only received 5 "nay" votes total between the House and the Senate when it passed in early 2012. Why did a bill that received overwhelming support now engender such an overwhelming response for its weakening? Why didn't the co-author of the original bill, Senator Gillibrand, call for at least a legitimate vote on the weakening of her bill? Why did Congressman Duffy, who proposed a stronger piece of legislation, not reject such a bill?

It seems that the political forecast in Washington D.C. remains cloudy with little chance of sunlight and transparency.


Updated:President Obama has now signed this bill only further confirming that the "most transparent  administration" is nothing but.

Crossposted here and here .

Peter Schweizer's Report Details "Compassionate Corporatism"

On Friday, FoxNews ran a second "Boomtown" special featuring Stephen Bannon and Peter Schweizer and highlighting the research done by Schweizer's Government Accountability Institute on food stamps. The federal government currently funds 126 separate anti-poverty programs, ranging from Medicaid to Pell Grants to food stamps. Since President Johnson declared the "war on poverty" in the 1960s, $15 trillion has been spent to combat it. Despite this, there are still 50 million Americans in poverty, including 20% of all children. 47 million are on food stamps--more than 15 times as many as in 1969. Anti-poverty programs have expanded greatly under the guise of "compassionate" conservatism and unveiled socialism. These programs, intended at least in word, to be a safety net for the poor, have actually become a hammock for large corporations. In essence, such programs are really "compassionate" corporatism.

Below is a table from a CATO Institute report detailing the failures of programs aimed at fight poverty:

During the Reagan administration, welfare spending remained relatively constant only to jump from about $200 billion a year to $300 billion a year during President George HW Bush's tenure. During President Clinton's two terms, welfare spending remained constant at around $300 billion a year. However, while President George W. Bush was in office, welfare spending jumped to around $500 billion a year by 2008. This upward trend has continued under President Obama.  According to Schweizer's report, both Bushes and Obama expanded eligibility for food stamps specifically. The welfare reform championed by Speaker Newt Gingrich and signed by President Clinton reduced the number of people on food stamps from 25.5 million to 17 million between 1996 and 2000. In the next four years under President Bush however, those numbers grew again from 23.8 million Americans under the more palatable Supplemental Nutrition Assistance Program (SNAP). This was the "compassionate" conservatism touted by President Bush, but who really received the compassion?

Former Bush speechwriter, Michael Gerson defined compassionate conservatism as "the theory that the government should encourage the effective provision of social services without providing the service itself." Additionally, the Bush White House claimed that faith based organizations would be empowered to provide these services, but in practice, it was large corporations--like JP Morgan--who were empowered. Schweizer's report details the role of JP Morgan in food stamp programs. When they acquired Citicorp Electronic Financial Services in 2003, they also received the contracts of what is now nearly half of all states EBT (akin to a food stamp debit card) programs. Since they became involved in the EBT business, JP Morgan has more than tripled their donations to Congressional members who sit on the Agriculture committees (The Department of Agriculture administers the program). Additionally, President Obama received more than $800,000 in campaign contributions from JP Morgan, which he promptly rewarded with an expansion of SNAP through the "stimulus" program and further expansion in 2010. What has this yielded for JP Morgan? According to Schweizer, they have made more than half a billion dollars off of SNAP since 2004, and their profit is expected to grow as SNAP continues to expand.

The very etymology of the word "compassion" indicates that  it cannot be provided by government. The word, compassion, really means to suffer with. How much can government empathize with the poor when their campaign accounts are being padded while their cronies' profits rise? Additionally, government cannot be compassionate with other people's money. American is known for being very generous. A study published last August noted that Americans gave over $214 billion to charity in 2008. "Red" states comprised the top eight states for charitable giving, while "blue" states made up the seven least charitable states. This is what compassion is--giving of one's own money to help those in need. It isn't using taxpayer dollars to perpetuate poverty while politicians' cronies profit.

Crossposted here and here.

Throw Them All Out--Read It with a Pair of Sunglasses!

Last week, I read Peter Schweizer's insightful book, Throw Them All Out. I found it to be very well researched and well written. It is a fascinatingly frustrating read, in a righteous indignation kind of way. The book is a reminder that we need to evaluate politics vertically (top to bottom) a lot more often rather than just approaching politics on the horizontal spectrum of left to right ideology. Schweizer further reveals that those at the top of the political food chain are politicians themselves and their cronies, and we everyday Americans are subject to the rules these individual craft for everyone but themselves.  Unlike intellectually dishonest researchers who often "forget" that correlation does not equal causation, Schweizer lays out the facts--the legislation, stock trades, associations, and timing-- of the unethical behavior of Congress, the White House, and their cronies and allows the reader to make the judgement for himself or herself. He's the prosecutor; the reader is the juror.

Throw Them All Out is comprised of three parts--discussion of Congressional transgressions, the gains made by politicians' cronies, and how Schweizer's feels these problems can best be addressed.   Much of the Congressional behavior Schweizer discusses was highlighted in the recent 60 Minutes segment. Schweizer goes into detail on Congresswoman Pelosi's insider trading on Bank of America IPOs and how earmarks for light rail projects would raise the value of nearby property that she owned. Isn't it interesting that if you had the letters P-E-L-O-S-I, you could spell both "IPO" and "lies" on a Scrabble board? Schweizer hits at both parties--from former Republican Congressman Dennis Hastert and Democrat Heath Shuler on their land deals and the benefit they received from legislation. Schweizer also presents an excellent expose on how Congress trades health insurance and drug company stock based upon early knowledge of whether or not healthcare legislation is posed to pass. Isn't it any wonder how Congress is more concerned with Americans health insurance and drug coverage specifically than they are with Americans health?

Schweizer continues in part two focusing in large part on two of Obama's wealthiest cronies-- George Soros and Warren Buffett. Schweizer highlighted the trend of hedge fund managers' growing closeness with the political arena. Such associations likely contributed to Soros' excellent stock picks that somehow seemed to be many of the same companies who received government grants. Buffett's modus operandi seems to be feigning populist outrage only to greatly gain from legislation like the TARP bailout. Schweizer also highlights how 80% of green energy loans went to companies associated with President Obama's top donors.  In reality, of course, with companies like Solyndra receiving hundreds of millions of dollars, all of this crony capitalism amounts to taxpayer dollars swirling the water efficient "green" toilet?

Schweizer closes the book with a few chapters that seem like a cross between the Federalist Papers and Thomas Sowell's Intellectuals and Society. He mixes both the thoughts and visions from the Founders on ethical government with the anti-Elite message Sowell pounded home in his book. He closes the book by offering some reforms to help solve this massive political problem. These reforms fall right in line with the reforms Governor Palin offered in her recent Wall Street Journal op-ed:

What are the solutions? We need reform that provides real transparency. Congress should be subject to the Freedom of Information Act like everyone else. We need more detailed financial disclosure reports, and members should submit reports much more often than once a year. All stock transactions above $5,000 should be disclosed within five days. 

We need equality under the law. From now on, laws that apply to the private sector must apply to Congress, including whistleblower, conflict-of-interest and insider-trading laws. Trading on nonpublic government information should be illegal both for those who pass on the information and those who trade on it. (This should close the loophole of the blind trusts that aren’t really blind because they’re managed by family members or friends.) 

No more sweetheart land deals with campaign contributors. No gifts of IPO shares. No trading of stocks related to committee assignments. No earmarks where the congressman receives a direct benefit. No accepting campaign contributions while Congress is in session. No lobbyists as family members, and no transitioning into a lobbying career after leaving office. No more revolving door, ever.

Recently, Governor Palin suggested that all presidential candidates read Schweizer's book. It would do us all well to read it also. It provides us with a glimpse into the swamp of Washington inhabited by both parties and offers proposals to drain that swamp.At less than 200 pages complete with references and tables, Schweizer's book is not heavy on opinions or words. It is a concise, yet thorough investigation of the political class. Former Supreme Court Justice Louis Brandeis once said that sunlight is the best disinfectant. You might want to read Schweizer's book with a pair of sunglasses.

Crossposted here and here.