icon Dec 26, 2014
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2014 was a depressing year politically because it clearly proved how the expansive growth of corporate influence in the wake of the Citizens United decision made several years ago, in which the United States Supreme Court decided that corporate entities are entitled to the same constitutional 1st amendment protections as individual citizens, opened government at all levels to an unfettered assault of influence peddling – those with the biggest bank rolls to influence the direction of our democracy are the winners; and today the simple reality is that principal trumps-out principles.

One shining exception to this rule happened the week before Christmas, when Governor Mario Cuomo banned the practice of hydraulic fracking in New York State. Thanks to New Yorkers Against Fracking, a coalition founded by the Food & Water Watch, and a strong network of grassroots activists demanded a two-year investigation on the adverse health effects of fracking, the state’s own commission confirmed what the anti-fracking movement has been saying all along – the process cannot be done safely.  Now is the time for Michigan, which is bordered by the largest bodies of fresh-water in the world – to follow suit.

On December 13th, the U.S. Senate passed the 2014 federal budget (HR 83) by a vote of 54-40, appropriating more than $1 trillion for federal agencies, with the House passing a whopping 1,600 page bill on Dc. 11th that contained a provision to roll back part of the Dodd-Frank Wall Street Reform & Consumer Protection Act. Citigroup lobbyists literally wrote the provision to weaken rules for Wall Street that were put in place in the wake of the last financial meltdown, which with this move now makes it easier for the biggest banks to get bailed out by taxpayers once again in the future. JP Morgan CEO Jamie Dimon, who should be in jail for knowingly perpetrating the credit-default fraud that helped trigger the first meltdown, along with the largest transfer of wealth in history, personally called up members of Congress to get their votes on this measure.

The provision allows entities insured by the Federal Deposit Insurance Corporation (FDIC) to trade complicated financial instruments known as custom swaps. Under Dodd-Frank banks were forced to ‘push out’ their custom swaps to subsidiaries not insured by the FDIC. Just four banks – Bank of America, Citigroup, Goldman Sachs, and JPMorgan/Chase control more than 90 percent of the banking industry’s swaps market.   PACs of these four banks gave an average of 2.6 times more money to members of Congress who voted YES than to those who voted NO on this measure.

Higher Education Act Reauthorization

In terms of educational quality, competence, and achievement, the United States ranks 36th in the world and Michigan ranks 40th in the nation.  Perhaps this is one of the many reasons Michigan also ranks anywhere from 30th to 49th in the country in terms of job growth, depending upon which survey you follow and the weight they apply to a myriad of quantitative data.

With college presidents earning unprecedented salaries and MEA union officials getting 20% pay increases, it’s the teachers and students who suffer. And the fact that  US Student loan debt has surpassed the $1 Trillion mark – now exceeding the combined total of credit card and auto loan debt, which comprises 6% of our national debt along with the total GNP of South Korea – this is something that we should find shameful.

In 2013, two thirds of undergraduates left school owing more than $35,000 in debt. Those grads continuing on to medical school can expect an additional debt load of over $166,000 and those who choose law school can expect to an additional $100,000.

The Higher Education Act (HEA) is the massive piece of legislation that governs much of the federal student loan system. It has to be periodically renewed by Congress and it is up for renewal in 2014. Traditionally, Congress has dragged its feet on reauthorization and this year proved to be no exception, given election-year politics and gamesmanship. The reauthorization of the HEA presents a significant opportunity to reform the student loan law and should be dealt with immediately.

Reforming Civil Forfeiture Laws.

Michigan legislators introduced a pair of bills that would have reformed the state’s asset forfeiture laws, which currently enable law enforcement agencies to seize property from innocent people easily and profitably. Michigan police departments & district attorneys have padded their budgets to the tune of $85 million over the last four years via forfeiture, according to Lee McGrath of the Institute for Justice, a law firm that litigates asset forfeiture.

HB 5213 would have required a criminal conviction before the police and prosecutors can forfeit property. Such a change would be desirable because Michigan police and prosecutors have an unfortunate habit of taking peoples’ stuff even when the criminal charges that supposedly justify the forfeiture are dropped, dismissed, or otherwise jettisoned.

HB 5081 would require seizing agencies to compile detailed reports on their forfeiture activities – a transparency that would encourage police to use funds more judiciously.

While neither of these bills were taken up the legislature in 2014, sources indicate that a new concept draft on forfeiture is in the works for 2015.

Michigan Medical Marijuana Reform Bills Sputter in Legislature & Leave Industry in Limbo

Michigan sheriffs reportedly helped kill legislation on December 19th  that would have allowed the legal return of medical marijuana dispensaries and edibles.

The move leaves dozens of MMJ dispensaries hanging on by their fingernails, since they’re technically illegal, even though Michigan allows medical marijuana use. Without regulation from the state, companies could be shut down by their county governments, and edibles will remain banned for patients who prefer ingesting to smoking.

Although there was hope that the pair of bills would be approved at the last minute, the state Senate adjourned its 2013-14 session without taking action on either measure. The bills had languished in the Senate for an entire year after clearing the House.

The MMJ industry in Michigan has been in limbo since the state’s Supreme Court ruled in February 2013 that many dispensaries constitute a “public nuisance.” Just a few months later, the Michigan Court of Appeals ruled that edibles are not a legal form of MMJ under state law.

State Rep. Mike Callton, a Republican from Nashville, told that it looked early as though his dispensary legislation would pass. But then the Sheriff’s Association “had all their sheriffs call all their senators, and suddenly we lost a lot of votes,” he said.

Callton promised to reintroduce new legislation next year, and said he plans to work with the opponents in order to get their support.

Speaking of Taxes.

In the past year, lawmakers here have talked much more about how to reach deeper into the pockets of Michigan citizens. They've done some actual reaching, too. For example, the current year state budget approved last spring contains $82.6 million in new or higher fees on families and business. The politicians may not call these "tax hikes," but the result is the same: more dollars are flowing from our pockets into government coffers.
Michigan lawmakers have also granted certain authorities, like "Business Improvement Zones," expanded powers to potentially impose higher local property taxes (special assessments) on property owners within their zones.
On the talk side, several increase proposals are under active consideration, including House Bills 4202 and 4203 to impose sales taxes on Internet transactions. Both bills are pending on the House floor, which means they could be brought up for a vote at any time.
 Big Grants for Big Guns

According to an article in ‘The Economist’, federal cash first used to wage war on drugs and then on terror has paid for much of the heavy weaponry used by SWAT teams across the United States.  Between 2002 and 2011 the Dept. of Homeland Security disbursed $35 billion in grants to state and local police. And the Pentagon offers surplus military weaponry to local police departments. By 2005 it had provided gear to more than 17,000 law-enforcement agencies; and apparently Saginaw County is the latest recipient.

A recent editorial in USA Today notes how something potentially sinister is happening across America. Small-town police departments across the country are acquiring free military grade weapons that could possibly be used against the very citizens and taxpayers that not only fund their departments, but who the police are charged with protecting.

In the case of the MRAP acquired by Saginaw County, the cost of these vehicles is estimated at nearly $700,000 and the local unit of government (i.e. the taxpayer) is responsible for all repairs and upkeep moving forward after the acquisition, which is estimated to average $50,000 per year.

A reasonable person might ask why is there such a surplus of these vehicles when the Defense Department is threatening to cut jobs anytime Congress talks about defense cuts? The main reason is that as we draw down from two major equipment-laden wars, much of this equipment is now being returned to the U.S.A.   And by passing down still good equipment to municipal law enforcement, it allows the defense industry to ask for more funding for even more equipment. So much for spending priorities.

To his credit, Saginaw County Sheriff William Federspiel announced he would be returning the MRAP, partly due to feedback from citizens and also because of these maintenance costs.

Opening up Transparency on the United States Supreme Court

A significant article in The New Yorker underscored the importance of getting the papers of Supreme Court justices into the public domain.  These documents are not considered public records, but private property and the decision whether to make them public is entirely at the discretion of the judges and their executors.
The court has no polices or guidelines for secretaries and clerts about what to keep and what to throw away. Some justices have indeed destroyed their entire documentary trail. Meanwhile, this fall the Supreme Court issued a number of rulings that came as something of a surprise – refusing to hear a series of cases involving same-sex marriage, for one example – but there’s no reason to believe historians will every really know how the Court arrived at these decisions.

The Federal Records Act, passed in 1950, specifically excludes the Supreme Court. In 1978, in the wake of Watergate, Congress passed the Presidential Records Act, which made the papers of American Presidents the property of the federal government and destroying them a federal crime.   But there is no equivalent for the judiciary.

The secrecy surrounding the U.S. Supreme Court derives from a policy set by the first Chief Justice, John Marshall, who wanted the court to issue single, unanimous decisions and to conceal all evidence of disagreement. His critics considered this policy to be incompatible with a government accountable to the people.  As the significance and power of the court has grown over the decades, this is a policy that needs to change.
U.S. Justice Department Fails to Prosecute Wall Street Fraud

Without doubt, one of the most disquieting and unsettling stories of the year was broken by financial investigative reporter Matt Tabbi, who chronicled a pair of stories underscoring how the massive fraud instigated by JP Morgan/Chase, Citigroup and Bank of America during the credit default SWOP crisis of 2006-2007, which resulted in the largest transfer of wealth in our nation’s history, and from which we are still recovering, was handled by a series of historic settlements with some of the world’s biggest banks.

No individuals paid penalties in any of these cases and the settlements were almost always paid entirely by shareholders, often containing tax-deductible portions and/or huge ‘consumer relief’ packages that padded the numbers.

Tabbi also reported how Alayne Fleischmann, a whistle-blower and central witness in one of the biggest cases of white-collar crime in America’s history, came forward to attest to the fraud, only to have Attorney General Eric Holder navigate a settlement with JPMorgan/Chase CEO Jamie Dimon that resulted in a payment of $9 billion to the government to keep the public from hearing her testimony.

This year she watched Holder’s Justice Department strike a series of historic settlement deals with Chase, Citigroup and Bank of America that was essentially an exchange of cash for silence and secrecy.  The banks paid big fines without trials or even judges; and the secret negotiations left the public knowing nothing but vague, quasi-official papers called ‘statements of facts’ that were in actuality devoid of anything but facts.

With Holder about to leave office and the Justice Department wrapping up final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping industry wide effort to bury the facts of a whole generation of Wall Street corruption.

In the case of JPMorgan/Chase, for perpetrating the mass mortgage deception that Fleischmann witnessed, the announced settlement was $13 billion, but what was actually paid was $6.55 billion. This translates to 104 days of 2013 pretax profits. Moreover, months after the settlement Dimon received a 75% raise. Meanwhile, with Citigroup, who basically was charged with the same mortgage deception as Chase, the settlement amount was $7 billion; but the amount actually paid was $4.3 billion. This amounted to 81 days of pre-tax profits. Moreover, the deal covered misdeeds committed when Treasury Secretary Jack Lew oversaw Citi’s mortgage unit.

And as was pointed out at the outset of this year-end retrospective, with the recent elimination by Congress of Dodd-Frank protections, the foxes are indeed guarding the henhouse.

Disquieting ways to end one year and begin a new one.

The Health Care Debate.

The health care law, Obamacare, or the Affordable Care Act — whatever you want to call it — continued to draw interest. There was more money spent against the law than on any other issue during the 2014 campaign. But the law’s future could, once again, hang in the hands of the nine Supreme Court justices next year when they take up whether federal subsidies for state exchanges are constitutional.

Just what will the new Republican-controlled Congress do about the health care law? For clues, look no further than Mitch McConnell’s comments that even though he wants to repeal it “root and branch,” he knows the president holds a veto pen and won’t let that happen.

The enactment and implementation of this law has been a perils-of-Pauline experience and simultaneously the most important piece of legislation enacted in decades. It survived a Supreme Court challenge thanks to Justice John Roberts, who nonetheless opened a loophole that has allowed Republican-controlled states to deny coverage to millions of Americans. They were supposed to be covered by a federally funded expansion of Medicaid, but some states are blocking that expansion and challenging it again in the higher courts.

Multiple independent surveys show a sharp drop in the number of Americans without Health Insurance, which averages around 10 million; and it has also provided greater financial security, even for those already insured because they now have a guarantee of coverage if they lose or change jobs.

As for the costs, in 2014 premiums on insurance policies offered through the exchange were well below those originally projected by the Congressional Budget Office; and available data indicates a mix of modest increases and actual reductions for 2015, which is very good in a sector where premiums normally increase five percent or more each year. More broadly, overall health spending has slowed substantially, with the cost control features of the ACA deserving some of the credit.

As 2014 comes to a close, while the ACA is a program that is coming in ahead of schedule ahd playing a significant role in reducing overall health costs, the verdict is still out in terms of its overall cost.  20 states are refusing to participate and valid concerns do exist in terms of its impact upon inflation and the national debt.
A single-payer system would have covered more people at lower cost, but that option wasn’t on the table; only a system that appeased insurers and reassured the public that not too much would change was politically feasible. Competition among insurers who can no longer deny insurance to those who need it most is turning out to be fairly effective; and while it isn’t the system you would want from scratch if you could ignore special interest politics, it has made several improvements in the system without resulting in the catastrophic consequences predicted from critics at the outset.

$18 Trillion in Debt.

It’s a huge number. But just as Congress was moving toward passing a massive $1 trillion spending bill to fund the government for a year, the country’s debt moved past $18 trillion.
There are plenty of reasons for the debt increase — and both parties are at fault in one way or another. But Americans continue to be worried about the level of debt and what it will mean for the country’s future.
The largest driver of the debt is entitlements and health care, both relatively apolitical, easy-to-tackle topics, right?

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