Third World America (17 page)

Picking foxes to guard the henhouse was standard operating procedure during the Bush years, when appointments to federal regulatory agencies were often used as a payback mechanism for rewarding major political donors, with industry hacks getting key government positions not because they were the best people to protect the public interest but because they were willing to protect the very industries they were meant to supervise.

That’s what happened when Bush put Edwin Foulke, a lawyer with a long history of open hostility to health and safety regulations, in charge of the Occupational Safety and Health Administration (OSHA), the agency meant to oversee workplace safety.
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Earlier in his career, while serving as chairman of the federal agency that hears appeals from companies cited by OSHA, Foulke led a successful effort to weaken OSHA’s enforcement power.
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With Foulke in charge of his former target, OSHA, not surprisingly, issued fewer significant standards than at any time in its history.

Then there was Bush’s choice of Mary Sheila Gall to head the Consumer Product Safety Commission, despite her tendency to blame consumers rather than manufacturers when defective products injured or killed.
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In her ten years on the commission, Gall voted against regulating baby walkers, infant bath seats, flammable pajamas, and children’s bunk beds.
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She even adopted a “Let them eat marbles” stance on the need for
toy labeling, voting against choke-hazard warnings on marbles, small balls, and balloons.
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Consumers, she argued, are aware of “the well-known hazard of very young children putting marbles in their mouths.”

In other words, if a kid chokes on a small toy, it’s because the parent is defective, not the product. And while I’m all for slapping warnings on defective parents, Gall’s attitude dishonors the lives of the twenty thousand people, many of them children, who are killed every year by defective products—to say nothing of the close to thirty million people a year who are injured by them.
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Thankfully, the Senate refused to confirm Gall.
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Undeterred, Bush filled the slot with Harold Stratton, a vocal opponent of states pursuing consumer protection cases.
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The Food and Drug Administration is another agency that has long had an overly cozy relationship with the very companies it is supposed to oversee—in this case, the pharmaceutical industry. This dysfunctional dynamic has proved especially deadly over the years, with numerous drugs pulled off the market after causing deaths and serious injuries to patients.

Following the money once again, we see that Big Pharma contributed more than $124 million to federal candidates between 2000 and 2008.
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In return, the Bush administration served up FDA commissioners such as Lester Crawford, who was forced to resign after failing to disclose that he owned stock in companies regulated by his agency.
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And, if you want to see “overly cozy” run amok, look no further than the Minerals Management Service, which, according to government watchdog reports, featured “a culture of substance abuse and promiscuity” wherein government employees did drugs and had sexual relationships with oil and gas
industry officials.
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So not only is the fox guarding the henhouse, it’s doing blow and sleeping with the hens. But it’s middle-class Americans who are getting screwed.

We have a regulatory system in which corporate greed, political timidity, and a culture of cronyism have rendered the public good a quaint afterthought.

The third leg in the Access Triple Crown is the way corporate America has used its economic clout to cultivate—okay, “buy”—friends in high places. It’s so much easier to get a politician to take your call when you have donated millions to him or used to work in the office next to him. Facebook is great, but the crony capitalism of Washington takes social networking to a whole different level.

We saw how all those former Senate and House staffers are making a buck by lobbying their former bosses and colleagues on behalf of the big banks looking to gut reform.
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It’s the same thing we saw during the health-care battle when those fighting against reform hired 350 former members of Congress and congressional staffers to influence the debate, including half a dozen former staffers of Senator Max Baucus, the influential chairman of the Senate Finance Committee. Among those lobbying Baucus were two of his former chiefs of staff.
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And among those on his staff being lobbied was Baucus’s chief health adviser, Elizabeth Fowler, who before joining Baucus’s team had been the vice president of public policy for WellPoint, the giant health insurance company.
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We got an unsettling glimpse of what this kind of cozy setup
leads to in the spring of 2009, when the big stimulus bill was being finalized in Congress.
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At the time, there was much public outrage directed at bailed-out companies that continued to pay their executives big bonuses. In response, Senator Chris Dodd inserted a clause in the bill that would have barred bailed-out companies from awarding bonuses. But, somewhere along the way, behind closed doors and without public debate, the Treasury Department insisted that a loophole be added to the bill that would allow AIG to pay out bonuses. Think about that: Even after having been bailed out to the tune of $182 billion, AIG still had the inside juice to get a special favor served up.
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It’s the same kind of inside juice that allowed Goldman Sachs chairman Lloyd Blankfein to have a prime seat at the table during the emergency weekend meetings in September 2008 when Treasury Secretary—and Goldman Sachs alumnus—Hank Paulson was deciding the fate of AIG—a fate that would have a multibillion-dollar impact on Goldman’s bottom line.
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It’s the same kind of juice that allowed Enron to become a major Washington player during the Bush years—before it became synonymous with corporate mendacity and greed. The crooked firm’s chairman, Kenneth Lay, and his senior management doled out $2.4 million to federal candidates in the 2000 elections and were among George W.’s biggest donors.
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Enron also spent $3.45 million lobbying Congress in 1999 and 2000, all of which helped the outfit push its “deregulation” agenda—which really meant creating enough “wiggle room” to get away with wholesale fraud.
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“Kenny Boy” Lay was known to boast about his “friends at the White House”—friends who helped him engineer the replacement of the head of the Federal Energy Regulatory
Commission, the agency charged with regulating Enron’s core business.
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He also had a lot of input on energy policy at the Bush White House: Vice President Dick Cheney and his staff had six meetings with Enron representatives—including two with Lay—as part of their energy task force.
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The last of those meetings took place six days before Enron was forced to reveal it had vastly overstated its earnings, starting the energy giant’s slide into bankruptcy.
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Another energy company, Upper Big Branch mine operator Massey Energy, has also realized the investment value of buying friends in high places. Back in 2000, Massey was responsible for a coal slurry spill in Kentucky that was three times larger than the
Exxon Valdez
oil spill.
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The company very successfully limited the damage—not to the environment, but to its bottom line.
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According to Jack Spadaro, a Mine Safety and Health Administration engineer investigating the spill, once Kentucky senator Mitch McConnell’s wife, Elaine Chao, became secretary of labor—the labor department oversees the MSHA—she put on the brakes.
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Two years after the spill, Massey was assessed a slap-on-the-wrist $5,600 fine. The same year, Massey’s political action committee donated $100,000 to the National Republican Senatorial Committee, which McConnell chaired from 1997 to 2000. Cozy.

And you can’t get any cozier than Linda Daschle, who, while her husband, Tom, was Senate minority leader, was one of the airline industry’s top lobbyists—although I’m sure pillow talk had nothing to do with her clients Northwest and American Airlines raking in one billion dollars from the government’s post-9/11 bailout of the airline industry.
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But there is no need to worry about familial conflicts of interest anymore because, since leaving the Senate, Tom
Daschle has moved over to the influence-peddling side of the street and made a bundle working as a “special policy adviser” at Alston & Bird, a lobbying firm that makes almost 50 percent of its income from health-care clients.
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Daschle, you’ll recall, came within a few unreported chauffeur-driven rides of being Obama’s health-care reform czar.
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Very
cozy.

Daschle has also bolstered his personal bottom line doing lucrative side gigs, such as serving on the advisory board of BP.
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Hopefully he wasn’t the one who advised BP CEO Tony Hayward to try to calm fears about the ecological catastrophe facing the Gulf of Mexico by saying that the spill was “relatively tiny” compared to the “very big ocean,” or who advised BP Chairman Carl-Henric Svanberg to refer to those affected by the spill as “the small people.”
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Have you noticed how the same names keep popping up again and again? It makes it seem as if establishment Washington is the political equivalent of a small theatrical repertory company: production after production, you always see the same actors—they just keep switching parts.

Tom Daschle is a senator, then a near–cabinet member overseeing health-care reform, then a “special adviser” to companies looking to undermine health-care reform.
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Robert Rubin is co-chairman of Goldman Sachs, then secretary of the Treasury, then a senior counselor of Citigroup—pocketing more than $126 million in cash and stock during his almost ten years there.
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Dick Cheney is a congressman, then secretary of defense,
then CEO of Halliburton, then the most powerful vice president in history—helping lead America into a war with Iraq that ends up netting his former company billions in sweetheart contracts.
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During the Bush-Cheney years, Halliburton became the poster child for crony capitalism, which is why it was both surprising and utterly predictable when the company came roaring back into the headlines during the BP oil spill fiasco.

It’s like one of those horror movie killers who keeps popping back up from the grave. You thought Halliburton had been eradicated when government audits showed the company had bilked taxpayers out of a billion dollars during the war in Iraq?
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You thought it was over when the Justice Department brought a civil fraud suit against a Halliburton subsidiary in 2010 for charging the government for tens of millions in unauthorized security services in Iraq?
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You thought reports that Halliburton had allowed U.S. troops to bathe in contaminated water had left them dead and buried?
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Well, they’re baaa-aaack! And their work sealing the bottom of the BP oil well will very likely be found to be at least a contributing factor in the catastrophic Deepwater Horizon blowout.
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Doing a segment on Halliburton’s involvement with the BP disaster—including the fact that, after taking office, Cheney restaffed the Minerals Management Service with what Robert F. Kennedy, Jr., called “oil industry toadies including a cabal of his Wyoming carbon cronies”—MSNBC’s Chris Matthews couldn’t contain his indignation.
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“How do we stop this?” he sputtered.
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“It seems like a Third World banana republic would do things this way!”

Third World America … it’s closer than you think.

These are the new breed of movers and shakers. Powerbrokers 2.0. Public shape-shifters, they effortlessly glide in and out and around government. They can be found on both sides of the ideological aisle—serving their own agendas more than either party’s. Janine Wedel calls them “flexians”: “top players who move in and out of government, corporate, and think tank roles, gathering exclusive information at each stop, and using that privileged asset to benefit themselves and their allies.”
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The members of this shadow elite keep morphing into their next incarnation no matter how often their conflicts of interest and their undermining of the public good are revealed.

With this merging of state and private power, we’re getting to the point where the only difference between senior congressional staffers and the lobbyists and influence launderers whose ranks they’ll soon join is the size of their paychecks. They just have to put in a few years in Congress, and then they can join, or rejoin, the lobbyist herd. It’s like putting in a few semesters getting your master’s degree in influence peddling. And you don’t have to pay off those irritating school loans.

The state-of-the-art modern powerbroker is the aforementioned Robert Rubin.

His résumé is the personification of the flexian in action, as he moved seamlessly between political positions (director of the National Economic Council, Treasury secretary), private positions (a board member and senior counselor at Citigroup), advisory positions (including serving on the President’s Advisory Committee for Trade Negotiations and the SEC’s Market
Oversight and Financial Services Advisory Committee), stints on a World Bank task force on growth and development, work as an unofficial economic adviser to President Obama, and his current position as co-chairman of the Council on Foreign Relations and founder of the Hamilton Project on challenges facing the U.S. economy.
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