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by Zach Carter, Media Consortium blogger

Undue corporate influence over U.S. elections has been a serious problem in American politics for decades, but this year’s Supreme Court ruling in Citizens United v. Federal Election Commission made things worse. Worst of all, we may never know the extent of the damage.

Citizens United freed corporations to spend unlimited amounts of money backing specific political candidates, and without congressional action, those expenditures can be completely anonymous. Major corporations are already capitalizing on the new legal landscape by the millions, and the public doesn’t really know who is buying what influence or why.

That’s why The Media Consortium will be carefully watching the effects of this ruling in the run up to this year’s midterm elections. Every day through Nov. 4, we’ll bring you some of the best independent reporting on the effects of corporate spending in an attempt to measure just how widespread the effect of Citizens United will be on this—and the next—election.  Keep your eye on “Campaign Cash” as we follow this issue in the coming weeks. If you want to tweet about it, use the hashtag #campaigncash.

The impact of Citizens United

As Harvard University Law School Professor Lawrence Lessig explains in an interview with The Nation’s Christopher Hayes, the Citizens United v. FEC decision represents one of many ways that corporations buy political favors.

Prior to the ruling, companies couldn’t spend money to directly advocate the election of a particular political candidate during election season. They could form Political Action Committees (PACs) to support or attack specific candidates, but those PACs had to be funded by individuals who worked for the company and couldn’t be funded from the corporation’s treasury directly. The executives of Goldman Sachs, for instance, could band together to form GoldmanPAC and spend their money on whatever candidates they wished—and many corporate employees exercised that right and spent freely on elections through their corporate PACs.

Now corporations can spend as much as they want and actual corporate funds—not just organized individuals—can also be deployed, making massive amounts of corporate cash eligible for political purchasing.

But the scariest part of Citizens United, as Lessig emphasizes, is the money that isn’t spent. That is, if a firm makes it known that they are willing spend millions of dollars to fight any politician who opposes them on a particular policy issue, representatives and senators might begin changing their voting behavior in Congress before the company actually has to put up the cash.

And ultimately, Citizens United didn’t just legalize unlimited corporate expenses on elections. It also allows those expenses to be anonymous. If companies launder their political cash through a front group, that third-party spender doesn’t have to disclose who its donors are.

This isn’t your local Chamber of Commerce

As Harry Hanbury details for GRITtv, this laundering scheme is essentially the business model for the U.S. Chamber of Commerce– a  lobbying powerhouse in the nation’s capital. Don’t be fooled by its name—the U.S. Chamber has almost nothing to do with the local small business coalitions who help strengthen local economies.

As Hanbury notes, 40 percent of the U.S. Chamber’s 2008 funding came from just 26 corporations. The group represents many of the nation’s largest and most irresponsible corporations, from those responsible for the financial meltdown on Wall Street to BP, the company that spilled millions of barrels worth of oil in the Gulf this summer. The Chamber’s branding allows them to disguise their political as a coalition of local businesses while it does dirty work for corporate titans.

When BP was publicly promising to do everything in its power to fix the massive oil disaster it created in the Gulf of Mexico, it was also funneling money to the U.S. Chamber of Commerce. And what was the Chamber up to? It was lobbying furiously to protect BP from new rules that would force the company to pay for oil disaster clean-up. The Wall Street banks did the same thing as financial reform legislation moved through Congress, and companies never have to disclose these expenditures to the public.

So it’s no surprise that the Chamber responded to Citizens United by immediately announcing a 40 percent boost in its political spending operations. So much corporate money then flowed into the Chamber that the group chose to boost this budget again by 50 percent, allocating $75 million for its 2010 war chest. So far, the Chamber’s ads have favored Republican’s 93 percent of the time. No entity spends more on politics than the Chamber—not even the political parties themselves.

Corporations top the list of big election spenders

But while the future of corporate spending in campaigns looks bleak after Citizens United, corporations are still barred from contributing directly to political campaigns. A company might take out a television ad attacking Rep. Alan Grayson (D-FL), but it can’t make unlimited contributions directly to Grayson’s challenger, Republican Dan Webster.

Nevertheless, corporate employees and company PACs have already been spending lavishly on elections for decades. In a feature for Mother Jones, Dave Gilson compiles the 75 biggest political spenders, both companies and trade groups, from 1989 through 2010, and breaks them down by industry. Goldman Sachs, Citigroup, JPMorgan Chase, and Morgan Stanley are all among the top 20 most extravagant political spenders—but the American Bankers Association, a trade group that all four belong to, is also in the top 10. If you’re wondering how Wall Street was able to secure its massive taxpayer bailout in the face of widespread voter outrage, this is your answer.

To soften the Citizens United blow, Congress has been debating the Democracy is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act, which would require companies to disclose all of their political expenditures as well as requiring front-groups like the Chamber to list the identities and amounts of its donors. The bill, sponsored by Rep. Christopher Van Hollen (D-MD) and Sen. Russ Feingold (D-WI), cleared the House this summer but was stymied by a Republican filibuster in the Senate.

Undoing the damage dealt by Citizens United through something like the DISCLOSE Act will help, but it won’t make our democracy totally safe from corporate abuse. As Lessig notes, the day before the decision was handed down, U.S. election financing was already encouraging rampant corruption and in need of serious reform.

Lessig suggests banning political expenditures by corporations altogether, and placing a hard cap on the amount that individuals can contribute. By limiting individual donations to $100, the ability of corporate PACs to funnel cash into the political process would be thwarted.

This post features links to the best independent, progressive reporting about the mid-term elections and campaign financing by members of The Media Consortium. It is free to reprint. Visit The Media Consortium for more articles on these issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

By Zach Carter, TMC MediaWire blogger

A new study by Economist Emmanuel Saez revealed this week that income inequality in the U.S. is more severe today than at any time since World War I, and the current recession is taking its heaviest toll on the worst-off members of our society. As our government rebuilds the financial sector using taxpayers’ money, it’s important to remember that both financiers and the government are responsible to our communities, not just bank shareholders. If we want to strengthen our country’s economic foundation, we need to demand better wages for workers and an end to all kinds of predatory lending.

Saez’s new data on income inequality is, as Paul Krugman put it, "truly amazing." Saez, who teaches at the University of California at Berkeley, found that the top 0.01% of U.S. earners had 6% of total U.S. wages, more than double the level in 2000. Earners in the top 10%, meanwhile, took home an astonishing 49.7% of all wages. That gap is larger now than during the Great Depression or the Gilded Age of the Roaring ’20s.

"We’re seeing Depression-era inequality again—only now it’s slightly worse," writes Steve Benen for The Washington Monthly. Benen also notes that this level of inequality is not an inevitable consequence of a market economy: It’s an extreme historical aberration. In the U.S., prosperity for much of the 20th Century was shared. But in 2007, at the economic bubble’s peak, the wealthy simply got wealthier.

In that context, it is beyond absurd that the government is allowing 8-figure bonuses to be doled out by bailed out banks. Writing for Salon, Robert Reich dissects the policy implications of Citigroup’s plans to pay its top executives an average of $10 million this year and award over $100 million to its top trader, a man who literally Read the rest of this entry →

by Zach Carter, TMC MediaWire Blogger

President Barack Obama rolled out his plan to overhaul financial regulation last week. While much of the Obama plan relies on the same regulators and structures that led to the current meltdown, there is one key exception. The establishment of an independent Consumer Financial Protection Agency would give ordinary citizens a seat at the financial policy table for the first time and prevent the abuses in credit card and mortgage lending that have wreaked havoc on households all over the country.

The new agency is the brainchild of Harvard University Law School Professor Elizabeth Warren. As chair of a key oversight panel for the Treasury Department’s bank bailout program, Warren has uncovered major deficiencies in the government’s handling of the plan, including nearly $80 billion in overpayments to bailed-out banks. American News Project features footage of an interview with Warren, who explains why we need a separate agency to regulate on behalf of consumers.

Several bank regulatory agencies, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision are already charged with writing and enforcing consumer protection rules for credit cards Read the rest of this entry →

by Zach Carter, TMC MediaWire Blogger

Earlier this month, President Barack Obama rolled out a new plan to limit the use of offshore tax havens and crack down on corporate abuse of the tax system. These tax havens siphon over $100 billion a year from the government, and have allowed many U.S. banks to duck paying taxes despite receiving massive, taxpayer-funded bailouts. The president’s plan is far from perfect, but comes as a welcome acknowledgment of the unfairness embedded in the current tax code.

Corporate taxes are precisely the type of issue that mainstream media outlets prefer to avoid. Even though the government’s tolerance of corporate tax evasion is a major scandal, it takes time to explain the issue’s intricacies, and it’s easier to resort to pundit-jousting than to provide a detailed report on how companies are cooking the books.

Most discussions of corporate taxes are quickly distorted by focusing on the overall income tax rate for the wealthiest corporations. This rate is 35% in the U.S., which is relatively high when compared to other developed nations with complex economies. But corporate lobbyists have successfully pushed thousands of complex loopholes into the U.S. tax code, making Read the rest of this entry →

By Zach Carter, Media Consortium MediaWire Blogger

President Barack Obama rolled out his highly anticipated federal budget proposal on Thursday, and while the plan represents a dramatic departure from the priorities of the Bush administration, its ultimate impact may be crippled by a counterproductive bank bailout.

First, the good news: The budget is awesome.

"Obama would raise taxes on the wealthy to pay for healthcare for the uninsured; cap pollution emissions; put billions more dollars into infrastructure and new technology; … invest in new education programs; and roll back the U.S. troop presence in Iraq," Mike Madden writes for Salon. "There were proposals to save money by modernizing the healthcare system … and by eliminating federal farm subsidies to the biggest and wealthiest recipients."

While it’s refreshing to see a set of priorities that put economic stability ahead of entrenched corporate interests, Obama’s call to reduce the federal deficit comes as a bit of a surprise. He has inherited a massive recession and defecit. Over at The American Prospect, Ezra Klein highlights an analysis of spending by Media Consortium alum Brian Beutler. Both bloggers agree that government debt is not a major problem, provided that borrowed funds are used to invest in something meaningful.

"Debt Read the rest of this entry →

by Zach Carter, Media Consortium MediaWire Blogger

In this week’s Audit, we’re examining Treasury Secretary Timothy Geithner’s thoroughly uninspiring bank bailout plan, which fails on almost every level. What’s more, some of the most insightful (and stinging) critiques of the proposal are coming from progressive media.

Robert Kuttner offers a strong analysis of Geithner’s strategy to salvage the banking industry in The American Prospect, noting that Geithner is explicitly avoiding the simplest and cheapest solution in favor of propping up the current Wall Street regime. The current plan is designed to support a financial architecture that has proven completely ineffective in maintaining the nation’s basic economic functions.

Geithner has thus far refused to nationalize the big, insolvent U.S. banks and give taxpayers ownership authority in exchange for their financial assistance. Instead, the new Treasury Secretary’s proposal devotes $1 trillion to writing insurance policies on bad mortgage assets to encourage private companies to buy those assets from troubled financial firms. This complicated strategy is designed to reduce the amount of money the government will have to pay to save the financial sector by bringing private enterprise into the bailout. However, the sheer convolutedness of the plan makes it Read the rest of this entry →

Obama was charged with being a "redistributionist" by conservatives within and without the McCain campaign during the final weeks leading up to the Nov. 4 election. Funny what happened. It turns out people actually find that drastic inequality thing offensive, particularly when they are losing their homes while the nation’s largest banks are getting billions in speedy federal assistance.

Treasury Secretary Henry Paulson still refuses to allocate one dime of his financial bailout funds to help struggling homeowners, while giving lip service to the idea that the housing market "correction" is at the heart of our current economic woes. Even the modest anti-foreclosure bill Congress passed in July is slow-going. In addition to about $1.7 billion to help underwater homeowners refinance into affordable mortgages, the bill directed an additional $4 billion local governments to help communities rehabilitate foreclosed homes. That sum will barely make a dent in the deepening foreclosure crisis, as Garland McLaurin of American News Project and Mary Kane of the Washington Independent detail in this video, but many cities and counties are yet to see their share of the $4 billion kitty. By contrast, hundreds of billions of dollars have been injected into banks in recent weeks.

At this Read the rest of this entry →