Political Fundamentals Are Not Destiny

Martin LongmanMartin Longman wrote a really thought provoking article over at Washington Monthly that pushes back against the fundamentals obsession of people like me, The Midterm Results Were Not Completely Preordained. I said “thought provoking,” however — not “right.” But the title of his article is right on: fundamentals are not destiny. And even I know that, as much as I may harp on them. Fundamentals tend to swamp everything else, but political scientists only claim that the economic trend in presidential years is responsible for 40% of the election results. That leaves a lot of other things to tip the balance. And that’s even more true in statewide and (especially) local races.

Longman’s first point is striking. He presented a graph of House results in Pennsylvania, Ohio, and Michigan in 2012 and 2014. Even though the Republicans got a much higher percentage of the vote in 2014, they ended up with exactly the same number of house seats in each of the three states. When I saw that I was speechless. But it didn’t take long to come to the same conclusion that he did:

One could look at this as a disappointment for the GOP. They did so much better in 2014 and got no reward for it. The better way to look at it is that what the American people think doesn’t have any influence whatsoever on who winds up controlling the House. The results were the same whether the president was being reelected (as he was in all three of these states) or being disparaged as a drag on the ticket. It didn’t make a difference whether the incumbent governor was being drummed out of office (as in Pennsylvania) or reelected in a landslide (as in Ohio).

And Longman isn’t exactly cherry picking. Currently, there are only 15 House seats nationwide that flipped, and another seven that are too close to call. It does show the pernicious effects of gerrymandering. And for the record, I’m very tired of hearing people claim that pushing all urban areas into as few districts as possible is not gerrymandering. The truth is that we could have laws that would divide states up in the most equitable way possible and we don’t. There is nothing natural about our current state.

The second point is more diffuse, but Longman noted the polls were particularly off on the statewide elections in Appalachia. And yes, the Democrats could be a lot more populist in terms of economics. But the fact was that the media was not interested in reporting these issues anyway. Instead, it was ISIS and Ebola — two issues that implicitly and explicitly made Democrats look weak. (Although note: is there anything to fear from either now? No!)

Something that I think Democrats need to consider very carefully is the party’s brand. By talking more about economics — an issue where even many conservative voters agree with “liberal” policy — the Democrats would not likely have won any more states. But they likely would have done better. And they would have started the generations-long process of winning the ideological debate about these issues. The problem, as I’ve discussed many times before, is that I don’t think the power elite in the Democratic Party want to win this debate. They are happy to talk about abortion and same sex marriage; but economic issues are as much a threat to them as they are to the Republican elites.

Regardless, political parties can’t just focus on the fundamentals — waiting around for the right conditions for them to get into power. For one thing, they would be in no position to exploit the opportunity once they got in power. I think that is largely what happened with the Democratic Party in 2008. Obamacare was fine, but why didn’t the party even start thinking about minimum wage until 2012? But issues like this are not just good policy, they are good politics. And they help — especially in close races. And this year, the Democrats lost almost all of the close races.

Keith Ablow and the Terri Schiavo Syndrome

Keith AblowLet us return to 2005, the year the American voter realized it had made a terrible mistake in the election the year before. You remember, if 2004, the voters were promised that Bush would “Get the fags!” But once re-elected, the voters found they had voted to “Privatize Social Security!” If ever there was a simple example of What’s the Matter With Kansas? it was Bush and his craven use of a conservative social issue to push a conservative economic wet dream. But 2005 also stands as the ultimate example of conservative overreach: Terri Schiavo.

As you may remember, Schiavo was an unfortunate woman in Florida who had a heart attack in her home. Due to lack of oxygen, she had massive brain damage. After 15 years, doctors had diagnosed that she was in a persistent vegetative state — that is to say, she was more or less what we think of as a zombie; she was no longer Terri Schiavo but rather just a body with a functioning brain stem. It was a tragic situation. Her husband wanted to end her suffering and move on with his life; her parents understandably wanted to hang on.

So the parents put together a video tape of their interactions with her. It was cut together from hours of tape, throwing together all the moments when it seemed as though Schiavo was responding to them. I don’t think they were meaning to be dishonest. When the will to believe is strong, one can be convinced of just about anything. I see no villains in the actions of any of the people directly involved. But the Terri Schiavo case did not stay confined with those directly involved.

Bill FristFirst, the Florida Republicans got involved. It passed “Terri’s Law” that allowed Jeb Bush to take control and have Schiavo’s feeding tub reinserted. When the law was found to be unconstitutional, the case ended up at the Federal Level. And that’s when Senate Majority Leader Bill Frist got involved. You see, he is a physician — a heart surgeon. And in one of the great acts of hubris, he countered the doctors’ diagnosis, even though they had actually spent time with Schiavo to determined her condition, “I question it based on a review of the video footage which I spent an hour or so looking at last night in my office.” It was also, of course, an ethical breach. It was clear that he was just saying what was politically expedient and using his medical degree to provide a patina of legitimacy. It amazes me that such actions do not cause doctors to lose their licenses.

But as bad as the 2005 Republican Party was, it really doesn’t hold a candle to the modern Republican Party. And this is especially evident on the RNC propaganda channel known as Fox News. I’ve been reminded a lot of Dr Frist when I’ve heard psychiatrist Keith Ablow who has been on the station for years as part of its “Medical A-Team.” (God help those treated by the “B-Team”!) And in that capacity, he has been psychoanalyzing President Obama, who he has determined has abandonment issues that cause him to hate white people. Here’s a good collection put together by Madia Matters for America:

Remember: this is the kind of stuff coming from the authoritarian conservatives. They have absolute respect for their own leaders and are shocked (“Shocked to find that gambling is going on in here!”) that anyone would even disagree with them. But they automatically treat opposing leaders as though they were common criminals. And Ablow is about the worst that they come. He is more than willing to prostitute his psychiatric degree for political gain. It is hard not to conclude that Ablow would have been one of those Nazi doctors doing “experiments” at the concentration camps. But I can’t say for sure, because just as with Ablow regarding President Obama and Frist regarding Schiavo, I have never met the man.

On Thursday, David Bauder at the Associate Press reported on a little push back, Fox‘s Ablow Regularly “Diagnoses” Obama. It contains a number of quotes from psychiatrists who are bothered by what Ablow does and how it reflects on the profession — something Ablow certainly doesn’t care about. But I was struck with the fact that even people at the crazy Media Research Center have a problem with him. Tim Graham criticized the whole issue of psychoanalyzing the president.

But he bugged me by noting that people on the left said that Bush the younger had “daddy issues.” This is false equivalence. To begin with, people were making a common observation, not a psychological diagnosis. Regardless, it was not psychiatrists coming on television claiming that they were objective scientists and they knew that Bush was invading Iraq because he was trying to prove to the world that his penis was bigger than his father’s.

It speaks poorly of our society that Ablow is not just considered unacceptable. Certainly he would have been at any time before the creation of Fox News. And I really do think that this is an important event. I doubt that Terri Schiavo would have been such a big deal without Fox News and all the rest of the right wing echo chamber. It creates a place where they can all get together and talk themselves into believing anything. And the nation is far worse off as a result.

Corporate Crime Is Not Real Crime — In US

Alayne FleischmannI find this offensive. Last year, JPMorgan Chase made a deal with the Justice Department to pay the largest fine in history, $13 billion, blah, blah, blah. But the big deal is not the fine, because, hell, it’s JPMorgan Chase; the company still made $18 billion that year. I think a major bank robber would be fine with a deal that only required him to pay 40% of the money he made that year. In fact, most regular felons have to pay a lot more than that in restitution. The money means nothing. But here’s the important part: according to the Washington Post, “The Justice Department and JPMorgan are hammering out the final details, including a statement listing what the company did wrong.” Consider our poor bank robber again. Can you imagine what a terrible thing it would be to be forced to admit his guilt?! I mean, the 30 years in jail is nothing compared to that! Of course, JPMorgan might also be open to further legal proceedings — focus on the “might” as in “won’t.” I mean, it’s been a year. Have you read about any indictments?

That was then. On Thursday, Matt Taibbi published a bombshell article, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare. It is about Alayne Fleischmann, a securities lawyer who used to work for JPMorgan Chase. And she tells the inside story of last year’s settlement. In brief: managers at the bank not only knew about the criminal behavior that was going on, they were the ones pushing it.

Matt TaibbiFleischmann worked under the manager for diligence who did not want any of his subordinates to send him email. He wanted everything done verbally, we assume because he didn’t want a paper trail that would lead to him after the bad securities the bank was approving blew up. Fleischmann and other subordinates did not approve many of the mortgages that were in the securities. This meant the securities could not be sold. So the subordinates were put under extreme pressure to okay bad loans.

What I find most interesting about this is that the situation is that the low-level employees like Fleischmann are the ones being set up for the fall. When the securities were shown to be the garbage everyone at JPMorgan Chase knew they were, the managers could feel safe with their bonuses knowing they could always claim that they were the victims of their subordinates who approved bad loans. It is despicable.

Fleischmann stands to lose her license and much more for coming forward because of a confidentiality agreement she signed. And it would be entirely typical of American “justice” that she gets punished while the actual criminals do not. And the criminals are everywhere, even at the very top of JPMorgan Chase:

[I]n early 2007, she sent a long letter to another managing director, William Buell. In the letter, she warned Buell of the consequences of reselling these bad loans as securities and gave detailed descriptions of breakdowns in Chase’s diligence process.

Fleischmann assumed this letter… would be enough to force the bank to stop selling the bad loans. “It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing,” she says. “But when the Justice Department doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.”

In February 2008, less than two years after joining the bank, Fleischmann was quietly dismissed in a round of layoffs. A few months later, proof would appear that her bosses knew all along that the boom-era mortgage market was rotten. That September, as the market was crashing, Dimon boasted in a ball-washing Fortune article titled “Jamie Dimon’s SWAT Team” that he knew well before the meltdown that the subprime market was toast. “We concluded that underwriting standards were deteriorating across the industry.” The story tells of Dimon ordering Boester’s boss, William King, to dump the bank’s subprime holdings in October 2006. “Billy,” Dimon says, “we need to sell a lot of our positions… This stuff could go up in smoke!”

In other words, two full months before the bank rammed through the dirty GreenPoint deal over Fleischmann’s objections, Chase’s CEO was aware that loans like this were too dangerous for Chase itself to own.

Why isn’t Dimon doing years in jail? Because that sort of thing just isn’t done to the likes of him. If he were ripping people off for five bucks by doing three-card monte in the subway, he’d be in jail. But defrauding people out of hundreds of millions of dollars somehow makes a man respectable.

So five years pass and the Justice Department contacts Fleischmann and gets all the goods on JPMorgan Chase. They are going to announce a widespread fraud case against the bank. But then Dimon calls the number three man at Justice and tells him the bank wants to negotiate. So the fraud case is dropped and JPMorgan pays a few billion and admits, “Yeah, some unnamed people misbehaved.” As Dennis Kelleher of Better Markets said, “It would be like charging a serial murderer with a single assault and giving them probation.”

And in the end, that $13 billion figure was a joke anyway:

The deal was widely considered a good one for both sides, but Chase emerged with barely a scratch. First, the ludicrously nonspecific language surrounding the settlement put you, me and every other American taxpayer on the hook for roughly a quarter of Chase’s check. Because most of the settlement monies were specifically not called fines or penalties, Chase was allowed to treat some $7 billion of the settlement as a tax write-off.

Couple this with the fact that the bank’s share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal. What’s more, to defray the cost of this and other fines, Chase last year laid off 7,500 lower-level employees. Meanwhile, per-employee compensation for everyone else rose four percent, to $122,653. But no one made out better than Dimon. The board awarded a 74 percent raise to the man who oversaw the biggest regulatory penalty ever, upping his compensation package to about $20 million.

As for the criminal investigation, well, the Justice Department apparently just dropped it. Fleischmann was not contacted for almost a year. She is understandably skeptical now. Consider what Eric Holder said about holding bank managers accountable, “Responsibility remains so diffuse, and top executives so insulated that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.” As Taibbi commented, “In other words, people don’t commit crimes, corporate culture commits crimes!” In a regular criminal case you would never see this. After a criminal was looking at decades in jail, then the defense could make social pleas. But when it comes to corporate crime and billions of dollars the Justice Department starts there, “They aren’t bad guys!”

As for Fleischmann, it will probably go very badly. If she doesn’t lose her license altogether, she will be blackballed. I’m sure the financial press will pick her life to death. But that’s what happens to ethical people in our society. Other than that, expect JPMorgan Chase to make even more money and for Jamie Dimon to get another raise.

Afterword

Check out the great Democracy Now! interview with both Taibbi and Fleischmann.

Power Elite Know Nothing of America

Divided: The Perils of Our Growing InequalityIn 2001, soon after George W Bush was inaugurated, I called the White House press office for comment on the latest IRS income data. The deputy spokesperson expressed disbelief at the official figures I read, so much so that I asked, “What do you think is the median income shown on tax returns in America?” The answer: $250,000. The actual figure at the time: $28,000.

—David Cay Johnston
Divided: The Perils of Our Growing Inequality

Rickie Lee Jones

Rickie Lee JonesAlthough it is hard for me to fathom, Rickie Lee Jones is 60 today. It is kind of hard to classify her work because she did a lot of different stuff. She really is the female Tom Waits (but don’t tell her I said that). I guess I would have to say that she is mostly jazz-pop in the tradition of Steely Dan. But generally more interesting and far more varied. I think there are two aspects of her greatness. First is that she is able to sing beautifully with real emotion — a trick that almost no singer is able to accomplish. I mean, lots of singers are able to put fake emotion in their singing — just listen to American Idol. Maybe she’s just a great liar, but I always think Jones is telling me the truth — even through her affected attitude.

The second aspect of her greatness is how she is able to translate conversational English into music. Take as the most obvious and early example, “Chuck E’s in Love.” The lyrics are all very natural. There is nothing terribly well formed by this:

He learn all of the lines, and every time
He don’t stutter when he talks
And it’s true, it’s true! He sure is acquired
A cool and inspired sorta jazz when he walks.

Yet with the music it’s just brilliant. And then on the macro-scale, the song is inspired. It tells the story first person from the outside. Why is Chuck E gone? He must be in love! But at the end, she flips it on its head and reveals that, actually, she was just playing and that she is the girl Chuck E loves. It’s brilliant and entirely in keeping with the way that she sings the song so slyly. I guess it is worth listening to:

Jones’ best work has been done in the last decade or so. She brought everything she had done up to that point into an amazing album, The Evening of My Best Day. The styles of the song vary widely, including a gospel protest song, Tell Somebody (Repeal the Patriot Act). It was followed by a number of great albums, most especially Balm in Gilead — an especially intimate album. Here she is at a radio station performing “Wild Girl” off that album:

I highly recommend all of her recent albums. It’s beautiful and compelling and real. You can’t go wrong.

Happy birthday Rickie Lee Jones!