Able Archer

Glass house Bush

From the New York Times:

Without using Mr. Obama’s name, President Bush, at a White House news conference on Thursday, assailed his willingness to meet Cuba’s new leader, Raúl Castro, without preconditions, saying that to do so would grant “great status to those who have suppressed human rights and human dignity.”

No one speaks with more authority on the status of those who have suppressed human rights and human dignity than our leader, President Bush.

—Douglas Carlucci

Jury seated in Sharpe James trial

Prosecutors and defense attorneys have agreed to a jury for the corruption trial of former Newark mayor and state senator Sharpe James.

On Thursday, James’ attorneys sought to suppress evidence related to his conduct as a state senator. Prosecutors planned to present taped statements James made in support of a 2004 Senate bill.

The peculiar bill was to function as a legislative fiat overruling a judicial decision against James. New Jersey Superior Court ruled in 1989, in Council of the City of Newark v. James, that under Newark’s mayor-council government, the council and not the mayor has the power to chose what municipal land to sell and the terms of the sale. The bill would change the law to say the council could only approve land sales presented by the mayor.

The bill passed with some modifications and became law in July 2004. The version of the bill approved by General Assembly and signed by the governor limited the effect of the law to municipalities with populations over 265,000. Newark is the only city of this size in New Jersey, with a population of about 280,000.

Prosecutors allege that James urged passage of Senate Bill 967 so he could increase his power to illegally benefit himself and political associates and that the tapes will help them prove this motivation, according to a brief filed Thursday by Alan Zegas, one of James' lawyers.

Attorneys for James argue that he was acting properly in his capacity as a senator and should enjoy immunity for those actions.

(The version of the bill James sponsored in the Senate can be seen here; the law that was passed can be seen here.)

Federal investigators subpoenaed the Statehouse last year for records on the bill. According to this Star-Ledger report from the time, James told fellow Democrats he would block the state budget if his bill was not passed.

—Douglas Carlucci

Sharpe James on trial, part one

Newark Mayor Cory Booker might be called to testify at former Mayor Sharpe James' trial.

James is accused of helping his alleged mistress, Tamika Riley, buy municipal land for well below market price. Riley quickly sold the land on the market, taking a huge profit. She is a co-defendant with James in the trial.

James' defense attorneys will argue that it was not the mayor but the City Council, of which Cory Booker was a member, that controlled the sale of city land.

The defense team may call Booker because as a councilman, he voted to authorize some of those land sales, said Alan Zegas, one of James' attorneys.

Booker voted with Councilmen Augusto Amador and Luis Quintana on March 20, 2002, to sell three properties to Riley for $18,000, according to city records. It remains unclear whether Amador and Quintana also will be asked to testify.

The resolution approving the sale said an investigation determined Riley had the proper qualifications and financial resources to acquire the properties and develop them. The resolution also called for Riley to "undertake the substantial rehabilitation" of the properties before reselling them at market-rate prices.

Riley sold the properties - without rehabilitating them - for $80,000, a profit of $62,000 in a month, according to the indictment against her and James.

Booker said he had not been asked to testify, nor had be been interviewed by federal prosecutors. He said he has had no involvement with the case since his administration complied with a subpoena for James' records. ...

Booker, despite his vote to approve the sale of property to Riley, was a critic of the discounted land program when he challenged James in 2002, arguing it favored the politically connected. After he was elected, he successfully sued the city to freeze the sales.

Booker also gave momentum to the FBI investigation into James, the Star-Ledger has previously reported. Shortly after his inauguration in 2006, Booker called U.S. Attorney Christopher Christie to tell him about bills for credit cards issued in James' name that had arrived at city offices, according to two law enforcement sources familiar with the conversation.

Judge William J. Martini is having a hard time gathering jurors, according to the New York Times:

“We have surveys that show that 53 percent of the public thinks that he’s guilty even though they haven’t heard the evidence,” Thomas R. Ashley, one of Mr. James’s lawyers, said in an interview as jury selection began.

Judge Martini expressed concern that so many jurors questioned their ability to be impartial, but noted that some of them also checked “yes” to Question 37, saying they could follow the law according to his instructions. So when Judge Martini starts questioning potential jurors individually on Wednesday, he plans to ask whether the questionnaire was poorly worded or the issues and public officials involved in Mr. James’s trial are truly that divisive.

Prosecutors have charged in an indictment that Mr. James, 72, used his connections to allow the companion, Tamika Riley, to purchase steeply discounted parcels of city land that she later sold at a profit of more than $700,000, often without fulfilling her obligation to improve the property.

Many Newark residents credit Mr. James with beginning the revitalization of downtown and, in his final years, a boom in residential development that saw hundreds of new houses replace vacant lots and dilapidated slums. As the city’s second black mayor, Mr. James has also been praised as a tireless, occasionally bombastic, advocate for racial justice.

But the former mayor’s blunt personality and taste for yachts and luxury cars also made him no shortage of enemies.

His administration was investigated in the mid-1990s after hundreds of thousands of dollars in donations to the Sharpe James Civic Association could not be accounted for, and although Mr. James was never charged, he came to be viewed by many as a symbol of the politician on the take.

Because federal court draws potential jurors from across North Jersey, Mr. James’s fate will likely be decided by a cross section of the demographics and divergent opinions found there.

More soon.

—Douglas Carlucci

Update on McCain and FEC

Washington Post follows up on McCain’s problems with the FEC:

On Monday, the Democratic National Committee filed a complaint with the FEC arguing that the way the loans were structured -- by using the promise of federal matching funds as collateral -- requires McCain to remain in the system. McCain "secured a $4 million line of credit to keep his campaign afloat by using public financing as collateral. He should follow the law," said Howard Dean, the DNC chairman.

The dispute centers on some of the most esoteric aspects of campaign finance law, but the implications for McCain's presidential bid are potentially serious. McCain applied for public financing last year, when his campaign was faltering. In February, when his campaign had turned around, he wrote the FEC seeking to exit the system. But to do so, McCain needed to show he had not yet received any federal funds and had not used the promise of those funds as collateral to borrow money.

Should the FEC or a federal court force him to remain within the system, he would have to abide by a $54 million spending cap until September, when the primary season ends. His campaign had spent $49 million as of Jan. 31, reports show.

McCain has to prove he did not use the promise of public financing as collateral for the loan. Both his campaign and the bank say he did not; they insist the collateral McCain offered was his future ability to raise money. At least one lawyer with experience with the FEC doubts this is possible:

"If the bank is saying they lent him money on the basis of future receipts, well, in presidential campaigns, their future receipts can be zero or millions," said Marc Elias, an election lawyer who arranged a loan in 2003 for the presidential bid of Sen. John F. Kerry (D-Mass.). "The idea that this would be a dependable source of collateral is preposterous."

As I have said, even if McCain is not actually breaking the law, he’s in an absurd position. His name is attached to the federal campaign-finance law. He has always said his work on the law was a matter of principle; it’s not popular among Republicans and didn’t win him many friends among conservatives. Now he seems to be trying to wiggle out of the rules he wrote. It’s not a good way to start his campaign.

Marc Ambinder posts clean-government group Democracy 21's opinion on the matter.

—Douglas Carlucci

Choose your battles with care

The New Jersey Republican Party is having a big fight to see who will get to lose the November U.S. Senate election to incumbent Frank Lautenberg this year, and the party chairman has had enough.

—Douglas Carlucci

Fairness doctrine

All right. It’s time for a little change.

I’m certainly not going to vote for John McCain, but the man has done a lot of positive things as a Senator. I have voted for and will continue to support Barack Obama, but he’s hardly perfect.

In the spirit of fairness, I want to post an article about McCain’s good work in support of media diversity, and another about Obama’s skirting the truth on lobbyist money.

Robert Scheer reminds us of McCain’s work against the 1996 Telecommunications Act. McCain was the only Republican among a team of Democrats who worked against the law, which allowed for unprecedented media consolidation:

As Republican presidential candidate Senator John McCain twisted briefly in the wind kicked up by that New York Times story suggesting he had swapped political favors for the personal favors of an attractive lobbyist for the telecommunications industry, I kept waiting for the public policy punch line. Surely the Times would spell out just what it was that McCain had delivered to big media beyond what the paper originally reported: an all-too-typical congressional request that the FCC speed up its review of a broadcast licensing dispute.

Vicki Iseman, the lobbyist in question, is praised on her company's Web site for her "extensive experience in telecommunications, representing corporations before the House and Senate Commerce Committees," and for "her work on the landmark 1992 and 1996 communications bills." Now that's a biggie, because the 1996 legislation, although you would never have learned this from the mainstream media at the time, opened the floodgates for massive media consolidation, thus rewarding media moguls for their many millions in campaign contributions. McCain was a big player on that Commerce Committee at the time, and I expected a Times revelation as to just how Iseman got McCain to help gift the media barons with their dream legislation.

The revelation never came, because the annoying reality is that McCain was one of the rare Senate opponents of the telecom bill that Iseman was pushing--as opposed to the New York Times, which, like every other major media outlet pushed for the legislation (in the case of the Times, without ever conceding its own corporation's financial bias in the matter). McCain was one of five senators (and the sole Republican) who, along with Democrats Russ Feingold, Patrick Leahy, Paul Simon and the great Paul Wellstone, who voted against the atrocious legislation, which President Bill Clinton signed into law.

The Times, which now has the temerity to question McCain's integrity on telecommunications policy, ran a shameful editorial back then, under the headline "A Victory for Viewers," insisting after the passage of the legislation that "there was one clear winner--the consumer." Seven years later, the paper's "Editorial Observer," Brent Staples, bemoaned one direct consequence of the passage of the Telecom Act, under the title "The Trouble with Corporate Radio: The Day the Protest Music Died." Noting that "corporate ownership has changed what gets played--and who plays it," Staples observed that the top two radio owners went from having a total of 115 stations before the act was passed to 1,400 between them afterward.

Read the whole article here.

Trudy Lieberman in the Columbia Journalism Review rebuts Obama’s line that he doesn’t take money from corporate lobbyists.

The word “lobbyist” seems to have a particular meaning in Obama’s campaign vocabulary. His stump speeches imply that he is not taking money from people who want things from the government and push for them. The reality is that he has.

To explain: Opensecrets.org, the Web site of the Center for Responsive Politics, is the most authoritative source on campaign finances. Basing its reports on data from the Federal Election Commission, the Center shows that Obama indeed doesn’t take much money from a sector the Center calls “lobbyists.” Through the end of December, Clinton received more than $800,000 and McCain around $400,000 from this group, which the Center says includes people who work for lobbying firms at the local, state, and federal level and their relatives who are not otherwise employed, as well as those who are officially registered as Washington lobbyists. Obama received contributions of about just $86,000 from this group. Obama’s Web site says he doesn’t take money from Washington lobbyists or political action committees,and the Center says that if his campaign finds that the money came from registered Washington lobbyists, it does get returned. …

Significantly, the Center’s lobbyist sector excludes in-house lobbyists who work solely for one company, union, trade association, or other group. These people may lobby, but their contributions are grouped in the totals for the various industries they represent, along with contributions from other employees in the sector, their relatives, whatever PAC money has been raised, and donations from trade and professional associations which, of course, carry lots of weight in the horse trading that occurs when legislation is drafted. (Corporations cannot contribute directly to candidates.)

Contributions made by the various industry sectors tell the real story in a presidential race. And Opensecrets.org shows that Obama is picking up gobs of money put on the table by these special interests—including those involved in health care, which will surely have a lot riding on the outcome of the election and will expect to be heard after the election is over.

Consider the sector called lawyers and law firms. Clearly, lawyers and law firms lobby on behalf of their own interests—like fighting malpractice reform, which could again surface as a thorny issue for the new administration. Clinton and Obama have raised similar amounts from lawyers and law firms—$11.8 and $9.5 million. McCain and Huckabee have taken far less. The health sector has also given to Obama, Clinton, and McCain. In the pharmaceutical and health product industries, contributions to Clinton total $349,000 and $338,000 to Obama. Again, McCain trails in donations at about $98,000, an indication that the sector sees the real action on the Democratic side of the ballot. Health professionals, which include doctors, nurses, and dentists, have given Clinton some $2.3 million and Obama $1.7 million.

Read the whole article here.

—Douglas Carlucci

Buckley debates Chomsky on 'Firing Line'

William F. Buckley, Jr., conservative writer and founder of the National Review, died yesterday while working at home in Connecticut. He was 82.

Buckley was a fine writer, and, although I don't share many of his principles, to me he represents qualities rarely found among today's political journalists: erudition, logic, and fierceness.

Here he is debating a pretty great foil, Professor Noam Chomsky, in 1969:

The second part of the debate can be seen here.

—Douglas Carlucci

More on National Journal rankings

I’m not the first writer to notice the odd coincidence of the National Journal deciding that John Kerry and Barack Obama were the most liberal members of the Senate in 2004 and 2008, respectively.

Steve Benen wrote this when the rankings were first released:

Taking a closer look at this year’s results, Obama and Joe Biden were both considered more liberal than Russ Feingold and Bernie Sanders. This, alone, should make one wonder about the reliability of the rankings.

Better yet, National Journal’s press release on the rankings noted the criteria was based on 99 key roll-call votes last year: “Obama voted the liberal position on 65 of the 66 votes in which he participated, while Clinton voted the liberal position on 77 of 82 votes.” So, Clinton voted for the liberal position 77 times, Obama voted for it 65 times, which makes Obama the chamber’s single most liberal member. Got it.

What’s more, Obama was the 16th most liberal senator in 2005, and the 10th most liberal in 2006, before racing to the front of the pack in 2007. National Journal suggests this has something to do with Obama moving to the left to curry favor with Democratic primary voters.

But there’s a more logical explanation: Obama missed a whole lot of votes in 2007 — he’s been on the campaign trail — but was on the floor for many of the biggest, most consequential votes. In nearly every instance, he voted with the party. And with that, voila! The most liberal senator in America.

Except that’s not much of a standard. The rankings use an amorphous meaning of the word “liberal,” and the percentage doesn’t take missed votes into account at all (which also helps explain why Kerry nabbed the top spot four years ago)

But none of that is going to matter for the rest of the campaign. The Republican National Committee has already issued a statement and, one assumes, every far-right outlet in the country will soon do the same.

Brian Beutler writes:

I think progressive commentators everywhere really ought to avoid burning a lot of pixels ruminating about who this helps and hurts electorally, and instead should call bullshit on the rankings themselves.

On almost any of the major votes that Obama missed, you'll find that men like Russ Feingold and Bernie Sanders were usually on hand, making phone calls, rallying their colleagues, and voting the right way. More to the point, those men advocate from the floor for progressive positions, with passion, every week while Barack Obama does not. Yes, passion is hard to gauge. But instead of trying (by, say, logging hours spent speaking at hearings, from the chamber, etc., and assigning those a value to be paired with voting records) National Journal relies instead on a weird system by which a senator who takes the "liberal" position 95 times out of 100 is somehow less liberal than his colleague who takes the liberal position 48 times out of 50. …

All of which is to say that this is philistinism masquerading as social science--it's the U.S. News College Guide of Washington politics. Journalists ought to understand that. And those of conscience ought to ignore it, or lay it bare, but certainly not feed into it.

I agree with both writers that the rankings are essentially bogus—they are not a reliable guide to a Senator’s legislative work. I would go a little further, though. It’s simply too perfect that John Kerry and Barack Obama were both the most liberal members of the Senate the year before each ran for president.

The explanation that both Kerry and Obama missed a lot of votes, making them seem more liberal by the National Journal’s criteria, does not gibe with the fact that several Senators made serious campaigns for the nomination in both cycles. John Edwards missed no votes in 2003? Chris Dodd didn’t miss as many votes as Obama in 2007, even though he moved his family to Iowa to campaign for the state's caucuses? What about Clinton? She wasn’t as busy campaigning as was Obama?

It's worth questioning when a supposedly disinterested magazine, marketed to government professionals, literally produces for the Republican Party one of their best talking points in two consecutive elections.

—Douglas Carlucci

Bad news for the middle class

After days of funny outfits and calculated vitriol in the campaign for President, two devastating pieces of economic news were revealed today.

Consumer gasoline prices are catching up with the rising price of crude oil—which has hovered around $100 a barrel for the last few days—and could reach $4 a gallon by summer.

“As of Tuesday, regular gasoline was selling at a nationwide average of $3.14 a gallon, according to AAA, the automobile club, up from $2.35 a year ago. The price has jumped 19 cents a gallon in two weeks,” reports the Times.

The exponential growth of gas prices is concurrent with creeping inflation.

The Labor Department reported that wholesale prices, which exclude taxes and distribution costs, rose 1 percent in January, in contrast to a drop of 0.3 percent in December 2007. Compared with a year ago, prices were up 7.4 percent. Excluding food and energy prices, which are more volatile from month to month, the index increased 2.3 percent from a year ago, up from 2 percent in December.

The latest inflation report appears to corroborate a broader trend of higher prices.

Last week, the Labor Department reported that the Consumer Price Index rose 4.3 percent last month from a year ago, compared with a 4.1 percent increase in December. The core rate of inflation — which excludes food and energy — was 2.5 percent, up from 2.4 percent. The Fed’s target for inflation is 1 percent to 2 percent.

Price increases, however, are not the worst news. Homes, the main asset of most working- and middle-class families, are rapidly losing value. The supply of homes is high while the market for them is uncertain because of chaos in the mortgage industry and all the other problems in the economy, including the consumer price increases described above.

A widely followed index of home prices in 20 metropolitan areas fell by 9.1 percent in December from the month a year ago. Using a three-month moving average, the index, the Standard & Poor’s Case-Shiller, is falling at an annual pace of more than 20 percent. The index tracks repeat sales of single-family homes; it does not include condominiums.

Another index of home prices that covers more of the country but does not track loans above $417,000 fell 0.3 percent in the fourth quarter from the period in 2006. The index, compiled by the Office of Federal Housing Enterprise Oversight, showed prices declining in all states, except Maine.

Even with prices falling, home prices remain out of line with wages in many parts of the country. A report by investment bank Credit Suisse concluded that home prices in some metropolitan areas—including Sunbelt boomtowns Phoenix and Miami—would have to decrease by 20 to 40 percent to be considered affordable.

This all adds up to one thing: people who aren’t rich are going to cut back on their spending. Most of the economic “growth” in this country in the last ten years has been based on this spending. The spending was sustained by two things: cheap consumer credit and illusory home equity. It’s one thing to have a house worth $600,000; it’s quite another to sell the house for that price on the open market. The “growth” was artificial because it did not include a key element of sustained economic growth: increased wages. Price increases have consistently outpaced wage increases. The only things that are becoming cheaper are things people can chose not to buy; probably those things are getting cheaper not because of increased efficiency or for any good reason, but because retailers are looking to dump them off at any price:

“The pressures are too great here,” said Seth B. Plunkett, a bond portfolio manager at American Century Investments, a mutual fund company. “Look at the things that are accelerating: food and energy. What is decelerating? It’s electronics and light trucks. These are not things that people buy every day.”

Reading between the lines

The Times article on gas prices contains two interesting pieces of information not entirely related to the point of the article.

The first is this:

[Phyllis Berry, a 31-year-old factory worker for General Motors in Cleveland] said that she used to take her four children to the movies four or five times a month. But with the cost of gas, tickets, popcorn and soda adding up to $70, they now go only once a month.

Economists rightly don’t like to rely on anecdotes, but this reflects my own experience. The costs of many things Americans routinely do—go to the movies, go to a ballgame, take a trip—are almost prohibitively high. There isn’t a lot of room for rising prices before consumers just cut these activities out. Seventy dollars is way too much for a family trip to the movies. If the big cinema chains and the studios don’t realize this, they are going to end up like the music industry: customers are going to find cheaper substitutes for their products. Consumers become more rational in tight times; they are going to realize they can watch a bunch of movies at home each month by subscribing to Netflix for $5 and cut out the trips to the movie theater unless the theater can offer them a bargain. Therefore, these non-essential industries are going to have to eliminate a lot of overhead if they are to survive a consumer spending slowdown.

And consider that Berry is paying $70 to take her kids to the movies in Cleveland; prices are almost always lower in the interior than on the coasts.

Also:

“An oil crisis is coming in the next 10 years,” John B. Hess, the chairman of the Hess Corporation, said at a recent conference held by Cambridge Energy Research Associates. “It’s not a matter of demand. It’s not a matter of supplies. It’s both.”

I’m familiar with the peak oil argument and the work of scholars who say such a crisis as Hess describes will occur; this, however, is the first time I’ve seen the head of a major American oil corporation say the same thing.

—Douglas Carlucci

What a coincidence

According to the National Journal, Barack Obama was the most liberal member of the United States Senate in 2007.

In 2004, the National Journal rated John Kerry as the Senate’s most liberal member. Obviously, those two men have something else in common.

The National Journal is owned by the Atlantic Media Group, which publishes The Atlantic, one of the country’s better publications, so I am prepared to give it the benefit of the doubt. It’s not like it’s the Weekly Standard making these ratings. But this seems like a pretty big coincidence, considering some of the hardcore liberals in the Senate: Ted Kennedy, Bernie Sanders and Russ Feingold, to name just a few.

—Douglas Carlucci