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If Elected, Clinton Under Pressure To Appoint Tough Wall Street Sheriffs

By Amanda Becker

WASHINGTON (Reuters) – Democratic Party progressives intent on reining in Wall Street are pushing Hillary Clinton to choose people to head the Treasury, SEC and other agencies who will crack down on big banks if she wins the White House on Nov. 8.

“Do they have a proven track record of challenging corporate power?” asked Adam Green of the Progressive Change Campaign Committee, a grassroots group aligned with U.S. Senator Elizabeth Warren, the party’s liberal firebrand.

In meetings with Clinton’s team, progressive groups are urging that she break sharply with the centrist, pro-business bent of some of the economic leaders who served her husband, former President Bill Clinton, and President Barack Obama.

Big U.S. banks are voicing concern about both Clinton and Donald Trump, her Republican rival who has accused corporate America of buying influence in Washington.

Among Democratic progressives, a favorite for Treasury secretary is Sarah Bloom Raskin, now deputy Treasury secretary and a backer of strict enforcement of the Volcker Rule that prohibits banks from making some types of speculative investments.

“I view proprietary trading as an activity of low or no real economic value that should not be part of any banking model that has an implicit government backstop,” Raskin, then a Federal Reserve governor, said in a 2012 speech.

Democratic activists, who believe Obama did not go far enough at the height of the 2007-2009 financial crisis to punish bankers and tighten regulation, want to make sure Clinton keeps her campaign promises to defend the 2010 Dodd-Frank reforms and build on them to curb Wall Street’s excesses.

Progressive priorities include ensuring the U.S. Justice Department pursues criminal cases against bankers, not just institutions.

Some Democratic activists are wary of two potential Treasury candidates – Sheryl Sandberg, Facebook’s chief operating officer, and Federal Reserve Governor Lael Brainard – because of links to the Bill Clinton and Obama administrations.

Sandberg was chief of staff to Treasury Secretary Larry Summers in Bill Clinton’s administration and Brainard was a top lieutenant to Timothy Geithner, Obama’s first Treasury secretary.

Locked in a tight race with Trump, Clinton has said little about any future appointments. Her spokesman, Brian Fallon, said any speculation about personnel is “entirely premature” as Clinton is focusing on winning the election.

She has no obligation to heed the advice of progressives like Warren or Bernie Sanders, who challenged Clinton for the Democratic nomination. But Clinton risks a damaging intraparty rift early in her White House tenure if she ignores them.

Kara Stein, a commissioner on the Securities and Exchange Commission, and Simon Johnson, a former chief economist at the International Monetary Fund and co-author of a book warning of the dangers posed by big financial institutions, are progressive favorites for SEC chair.

Progressives also favor Gary Gensler, an adviser to Hillary Clinton, for a senior administration role because of his reputation as a tough regulator when he headed the Commodity Futures Trading Commission in the Obama administration.

Jeff Hauser, director of the Revolving Door Project at the Center for Economic and Policy Research, said progressives have a “broad feeling of regret” that they did not exert more pressure on Obama to name officials committed to bold financial regulatory reforms.

“It wasn’t so much that progressives lost, it’s that they didn’t understand the stakes at the time and didn’t get into the game until it was too late,” Hauser said.

Warren, who would have a big microphone in any potential fight over U.S. Senate confirmation of nominees, in a speech last week at the Center for American Progress, warned Clinton against choosing people who work at big investment banks.

“When we talk about personnel, we don’t mean advisers who just pay lip service to Hillary’s bold agenda, coupled with a sigh, a knowing glance, and a twiddling of thumbs until it’s time for the next swing through the revolving door, serving government then going back to the very same industries they regulate,” she said.

The New York-based Roosevelt Institute think tank is seeking lesser-known candidates, some outside Washington, for at least 120 administration jobs. Their potential candidates include state attorneys general who have taken on for-profit colleges and handled large mortgage settlements.

(Reporting by Amanda Becker; Editing by Caren Bohan and Howard Goller)

IMAGE: Hillary Clinton stands along side Senator Elizabeth Warren at a campaign rally in Cincinnati, Ohio. REUTERS/Aaron Josefczyk

Obamacare’s Nine Lives

If Obamacare survives the latest Supreme Court challenge, it will really be the cat with nine lives.

The death of what became the Affordable Care Act has been predicted regularly ever since President Obama’s election in 2008. Right afterwards, I got a wave of calls from reporters, each highly skeptical that the president-elect would really try to get health care passed. When you consider the relentless attacks and near-death experiences ever since, the reporters’ skepticism was understandable.

So when I found myself with a fresh surge of anxiety before the Supreme Court heard oral arguments in March on the latest assault on the law, I decided to list all the times that the survival of the Act was up in the air. And when I then counted them, it turned out that they numbered eight. So if Obamacare survives this last, desperate challenge in the Supreme Court, it really will have nine lives. Here they are, in chronological order:

1. The Great Recession: After Obama’s election a chorus of pundits predicted that the new president would have to give up his promise of health care reform because of the economic crisis. Instead, the president worked to get the economic stimulus passed, while paving the way for health reform. Just a few weeks after the stimulus became law, the president went on a national tour to push for action on health care.

2. Tea Party August: The Tea Party movement came to national attention with loud, vitriolic attacks on health care at congressional town meetings held by Democrats in August 2009. Republicans gleefully predicted they had killed the bill. But by the second half of August, supporters of health reform had rallied at dozens of town hall meetings, usually turning out more activists than the Tea Partiers. The press didn’t give the same attention to meetings that were not marked by raucous demonstrations. But Democratic lawmakers were sent back to Congress knowing they had support in their home districts to move ahead.

3. Scott Brown’s Election: The surprise election of Republican Scott Brown to the U.S. Senate in January 2010, on a platform opposing health care, looked like it might kill the bill. But having voted to pass the legislation in both houses, Democrats were not going to turn back. President Obama rallied the public by finally attacking the practices of health insurance companies and even without a filibuster-proof majority in the Senate, the Patient Protection and Affordable Care Act became law.

4. The Supreme Court Challenge: Immediately after the ACA’s passage, opponents launched a legal attack, which – shocking most legal scholars – was taken seriously by the courts. And by the time the Supreme Court heard the challenge, the odds were that the Court would gut the key provision of the law that enabled insurance to be affordable to individuals. But Chief Justice Roberts saved the day  – and much of the Court’s credibility.

5. The 2012 Election: If the Senate had gone Republican in 2012 – as was widely predicted – and Mitt Romney been elected, Obamacare would have been repealed. Instead, the ACA emerged with a new electoral mandate.

6. Government Shutdown and Congressional Repeals: I hesitated to put the 50 or so Republican votes to repeal the law, culminating in the government shutdown in the fall of 2013, on the list, only because of President Obama’s veto pen. But even if the ACA always had the presidential veto as armor, the barrage of repeal missiles has got to be counted. Texas senator Ted Cruz led the government shutdown before health insurance enrollment opened up because, as he said, “no major entitlement has ever been implemented and then unwound.”

7. Healthcare.gov: And then, with the disastrous launch of the website to enroll people in health care, Ted Cruz appeared to have gotten his wish fulfilled. The ACA might not be legally dead, but much of it was functionally comatose. Then the administration resuscitated the website, and millions were enrolled and started benefiting from the coverage. It looked like, as Cruz feared, the ACA was here to stay.

8. Supreme Court Redux: That is until the Supreme Court agreed to hear a desperate, last-minute challenge to the ACA’s subsidies for millions of newly enrolled people in the King v. Burwell case. Could this be like one of those movies where the soldier survives the war, only to be killed by a bullet on his way home, fired by an enemy that hadn’t heard the war was over?

The news reports of the oral arguments were encouraging, particularly Justice Anthony Kennedy’s raising of a constitutional issue with the plaintiff’s case. And there are a host of other legal reasons to believe that the lawsuit is groundless. But then it did get this far. The opponents have been relentless. They haven’t gotten the message that the war is lost.

In June, we’ll find out if the ACA is indeed the cat with nine lives. Easy to laugh at, if not for the fact that the actual lives of millions of people who rely on the law for life-saving health care are at stake.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Advisor to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

This was originally published in Next New Deal, the blog of the Roosevelt Institute.

Photo: Mark Hillary via Flickr

America’s Tax Code Is Broken, But The Rubio-Lee Plan Won’t Fix It

“We believe that America’s best days are still ahead. But we also recognize that restoring the shared prosperity that comes from a strong economy requires reforming the most antiquated and dysfunctional government policies, beginning with the federal tax system.”

—Senators Marco Rubio and Mike Lee 

Finally, something we can all agree on.

In their joint op-ed in Tuesday’s Wall Street Journal, the two Republican senators proposed a new tax plan and argued that our current federal tax structure is broken, its problems “rooted in the same fundamental unfairness and inequity of a government that picks winners and losers.”

Again, we here at the Roosevelt Institute welcome this realization. For too long, our tax code has helped the few at the expense of the many. Unfortunately, an analysis of their proposed solutions shows that the senators have come out on the wrong side of this argument.

First, they propose lowering the top corporate tax rate to 25 percent. This would be a step worth discussing if not for the fact that, with offshore tax havens and a wealth of other tax benefits, America’s largest corporations currently pay an effective rate of just 12.6 percent. In the words of Roosevelt Institute Chief Economist Joseph Stiglitz, it would seem that the problem is not double taxation, but no taxation.

The senators then argue that, in order to incentivize investment, they would make all capital expenditures 100 percent tax deductible, suggesting that taxes have squeezed corporations out of the investment business. But if this is the case, then how do we explain the $2 trillion currently being held abroad by America’s largest corporations? And what about the enormous sums that companies like Apple and Home Depot are spending on buybacks to enrich investors?

In fact, new research from Roosevelt Institute Fellow J.W. Mason shows us that the link between corporate cash flow and productive investment has been all but severed since the shareholder revolution of the 1980s. Shareholders now pocket an increasingly large portion of corporate earnings and borrowing that would have once gone to capital investments, job creation, or raising workers’ pay. Given these facts, as well as the current level of historically high profits, it is clear that corporate investment is not suffering from lack of funding, and that more spending on corporate welfare is the wrong way to go.

Lee and Rubio suggest that corporate taxes drive American industries abroad. This is absolutely true: Corporations want to benefit from American security, infrastructure, and human capital, but they don’t want to pay their share to maintain those invaluable assets, so they shelter themselves in tax havens like Ireland. The problem, from our point of view, is not, as Rubio and Lee suggest, that the tax code taxes corporations (indeed, that is what a tax code exists to do); the problem is that it allows wealthy corporations to avoid those taxes.

We need policies that will ensure corporations contribute like the rest of us, not ones that will commit more public money to private enterprise.

The senators state that their plan is guided by the principles of fairness, freedom, and growth. This raises the question: In whose mind is it fair to spend hundreds of billions of dollars on wealthy corporations, while Americans drive on pothole-pocked roads and send their children to overcrowded schools to learn from underpaid teachers?

For the individual income tax, Rubio and Lee propose reducing the number of brackets to two — one at 15 percent and one at 35 percent. Even though they have been greatly reduced since the 1980s, lowering rates for middle-income earners is worth discussing. The far more significant part of this proposal, however, is the 11 percent tax break for top income earners, which would further reduce the amount of public funds available for things like roads and schools, and which would further tip our economic balance toward the wealthy.

The senators would likely argue that this tax break will stimulate productive spending, but trickle-down economics did not work under Reagan and will not work now.

Toward the end of their op-ed, the authors posit a series of pro-family tax reforms, like tax credits for children and tax breaks for couples filing jointly. These policies are rooted in a belief that families with married parents are more economically stable and productive than single-parent families. Again, this may be a point worth debating, but these minuscule incentives are scarcely more than lip service to the American middle class, which this plan largely forsakes in favor of more tax cuts for large corporations and the wealthy.

More generally, Rubio and Lee frame their entire plan as a benefit to average Americans, but do this while glossing over policies that will only continue our current trend of supporting the wealthy at the expense of the country as a whole. The Stiglitz tax reform plan, on the other hand, offers a blueprint for a tax code that would bolster the middle class while driving growth and opportunity.

Now that we’ve all agreed on the problem, we should look to solutions that economists tell us actually work.

Eric Harris Bernstein is a Program Associate at the Roosevelt Institute.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: U.S. Senator Mike Lee of Utah speaking at the 2015 Conservative Political Action Conference (CPAC) in National Harbor, MD. (Gage Skidmore/Flickr)

Guns On Campus: Not An Agenda For Women’s Safety

Allowing guns on campus won’t reduce sexual assault on campus — instead, it will increase the risk of homicide.

Two years ago, Republican leaders released a post-mortem analysis of the 2012 election in an effort to better understand how they lost the single women’s vote by 36 percent. The 100-page report recommended that GOP lawmakers do a better job listening to female voters, remind them of the party’s “historical role in advancing the women’s rights movement,” and fight against the “so-called War on Women.” Look no further than recent GOP-led efforts to expand gun rights on college campuses under the guise of preventing campus sexual assault for evidence that conservative lawmakers have failed to take their own advice.

Today, lawmakers in at least 14 states are pushing forward measures that would loosen gun regulations on college campuses. In the last few days, a number of them have seized upon the growing public outcry over campus sexual assault to argue that carrying a gun would prevent women from being raped. (So far they’ve been silent on how we might prevent young men – who, of course, would also be allowed to carry a gun – from attempting to rape women in the first place.)

Republican assemblywoman Michele Fiore of Nevada recently told The New York Times: “If these young, hot little girls on campus have a firearm, I wonder how many men will want to assault them? The sexual assaults that are occurring would go down once these sexual predators get a bullet in their head.” (Really? Hot little girls?) And as the Times highlighted, Florida representative Dennis Baxley jumped on the “stop campus rape” bandwagon recently when he successfully lobbied for a bill that would allow students to carry loaded, concealed weapons. “If you’ve got a person that’s raped because you wouldn’t let them carry a firearm to defend themselves, I think you’re responsible,” he said.

Let’s be clear. People aren’t raped because they aren’t carrying firearms. They are raped because someone rapes them. What a sinister new twist on victim blaming. As if anything positive could come from adding loaded weapons to the already toxic mix of drugs, alcohol, masculine groupthink, and the rape culture endemic in college sports and Greek life on campuses around the country.

These lawmakers have appropriated the battle cry of students who are demanding more accountability from academic institutions to prevent and respond to campus sexual assault. It’s a vain attempt to advance their own conservative agenda of liberalizing gun laws. This is an NRA agenda, not a women’s rights agenda. According to Everytown for Gun Safety, each of the lawmakers who have supported such legislation has received an “A” rating from the National Rifle Association (NRA). They have enjoyed endorsements from the NRA during election years and some – including Fiore and Baxley – received campaign contributions from the organization.

These lawmakers are pointing to the demands of a handful of women who have survived sexual assault and are advocating for liberalized campus gun laws. The experiences of these students are real and deserve to be heard and considered as we debate how to make campuses safer. We must also recognize that these students are outliers. Surveys have shown that nearly 80 percent of college students say they would not feel safe if guns were allowed on campus, and according to the Times, 86 percent of women said they were opposed to having weapons on campus. And for good reason.

Research shows that guns do not make women safer. In fact, just the opposite is true. Over the past 25 years, guns have accounted for more intimate partner homicides than all other weapons combined. In states that that require a background check for every handgun sale, 38 percent fewer women are shot to death by intimate partners. The presence of a gun in a domestic violence situation increases the risk of homicide for women by 500 percent. And women in the United States are 11 times more likely than women from other high-income countries to be murdered with a gun. Guns on college campuses would only make these statistics worse.

If the GOP wants to show they care about women – or at the very least care about their votes – this is just one of the realities they need to acknowledge. And they need to listen to the experiences of all women who have experienced sexual assault – like those who have created the powerful Know Your IX campaign – not just those who will help advance their NRA-sponsored agenda.

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter @dreaflynn.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: Keary O. via Flickr