Tuesday, November 15, 2011

John Kennedy Warned of the Television-Political Complex

Paul Schutzer: Kennedy-Nixon Debate with Howard K. Smith as Moderator, Sep 26, 1960
A year before Senator John Kennedy and Vice President Richard Nixon faced off in the first televised debate on September 26, 1960, Kennedy wrote an article for the November 14, 1959 issue of TV Guide in which he contemplated the influence television would have on politics, and vice versa. He noted that years before, President Wilson had taken to the train in a cross country appeal to the nation in support of the League of Nations and suffered a stroke as a result of the strain, whereas, President Eisenhower was able to speak to millions of people about the current national labor situation in a single 15 minute TV address without having to step out of his office.

Kennedy observed television was not just a communication marvel, but one, he warned, which could create a political identity for candidates, deserved or not, irrespective of their records and opinions - the image, the brand - that would be fixed in the public's mind. "It is a medium," he wrote, "which lends itself to manipulation, exploitation and gimmicks. It can be abused by demagogs, by appeals to emotion and prejudice and ignorance.

Political campaigns can be actually taken over by the “public relations” experts, who tell the candidate not only how to use TV but what to say, what to stand for and what “kind of person” to be. Political shows, like quiz shows, can be fixed-and sometimes are."

Unlike the current White House resident who seems to revel in denigrating Americans, most recently calling them "lazy", Senator Kennedy reminded the good folks of this country, "It is in your power to perceive deception, to shut off gimmickry, to reward honesty, to demand legislation where needed. Without your approval, no TV show is worthwhile and no politician can exist."

Noting the anniversary of Mr. Kennedy's TV Guide article, Mother Board, was good enough to provide the article along with an excellent commentary that should be read, too. Here is the JFK article in full:
A Force That Has Changed The Political Scene

By Sen. John F. Kennedy
Democrat, Massachusetts

The wonders of science and technology have revolutionized the modern American political campaign. Giant electronic brains project results on the basis of carefully conducted polls. Automatic typewriters prepare thousands of personally addressed letters, individually signed by automatic pens. Jet planes make possible a coast-to-coast speaking schedule no observation-car back platform could ever meet.

Even wash-and-wear fabrics permit the wilted nonstop candidate to travel lighter, farther and faster.

But nothing compares with the revolutionary impact of television. TV has altered drastically the nature of our political campaigns, conventions, constituents, candidates and costs. Some politicians regard it with suspicion, others with pleasure. Some candidates have benefited by using it – others have been advised to avoid it. To the voter and vote-getter alike, TV offers new opportunities, new challenges and new problems.

But for better or worse-and I side with those who feel its net effect can definitely be for the better – the impact of TV on politics is tremendous. Just 40 years ago Woodrow Wilson exhausted his body and mind in an intensive cross-country tour to plead the cause of the League of Nations. Three weeks of hard travel and 40 speeches brought on a stroke before had finished “taking his case to the people” in the only way then available. Today, President Dwight Eisenhower, taking his case to the people on the labor situation, is able to reach several million in one 15-minute period without ever leaving his office.

To cite another example: The most dramatic political trial in our history was the Impeachment trial of President Andrew Johnson in 1868, avidly followed by all the Nation. Newspaper accounts were decidedly partisan – those who wished to see and judge for themselves flocked to Washington by carriage and train. But even if every seat in the Senate galleries had been occupied by a different person every day for the two months of trial, no more than 3000 people could have witnessed that historic event. But In the month of May 1954, an estimated 70 million TV viewers watched part or all of the Army-McCarthy hearings.

These hearings, the Kefauver crime hearings, the McClellan rackets hearings, the conventions of 1952 and 1956-these and other “political TV spectaculars” have given the American public new ideas, new attitudes, new heroes and new villains. Less dramatic but also important have been the televised panel press conferences, the debates, interviews, campaign speeches and even the political commercials. Many new political reputations have been made on TV-and many old ones have been broken.

The searching eye of the television camera scrutinizes the candidates-and the way they are picked. Party leaders are less willing to run roughshod over the voters’ wishes and hand-pick an unknown, unappealing or unpopular in the traditional “smoke-filled room” when millions of voters are watching, comparing and remembering.

The slick or bombastic orator, pounding the table and ringing the rafters, is not as welcome in the family living room as he was in the town square or party hail. In the old days, many a seasoned politician counted among his most highly developed and useful talents his ability to dodge a reporter’s question, evade a “hot” Issue and avoid a definite stand. But today a vast viewing public is able to detect such deception and, in my opinion, willing to respect political honesty.

Honesty, vigor, compassion, intelligence – the presence or lack of these and other qualities make up what is called the candidate’s “image.” While some intellectuals and politicians may scoff at these “images” – and while they may in fact be based only on a candidate’s TV impression, ignoring his record, views and other appearances – my own conviction is that these images or impressions are likely to be uncannily correct. I think, no matter what their defenders or detractors may say, that the television public has a fairly good idea of what Dwight D. Eisenhower is really like – or Jimmy Hoffa – or John McClellan – or Vice President Nixon -or countless others.

This is why a new breed of candidates has sprung up on both the state and national levels. Republican Governors Rockefeller (New York) and Hatfield (Oregon) successfully countered the Democratic trend in 1958 with particular reliance on TV appeal. The list of fresh Democratic faces who understood – and scored on – this medium in 1958 is almost endless: including new governors such as Edmondson of Oklahoma and Patterson of Alabama, new senators such as McGee of Wyoming and Hart of Michigan, new mayors such as Gracy of Baltimore (1959)-as well as a host of others, elected or reelected in 1958 or earlier.

Most of these men are comparatively young. Their youth may still be a handicap in the eyes of the older politicians – but it is definitely an asset in creating a television image people like and (most difficult of all) remember.

This is not to say that all the politicians of yesteryear would nave been failures in the Age of Television. The rugged vigor of Teddy Roosevelt, the determined sincerity of Woodrow Wilson, the quiet dignity of Lincoln and the confidence-inspiring calm of FDR-all would have been tremendously effective on TV.

Can you imagine the effect of televising FDR’s “Fireside Chats”? How different history might have been had a nationwide TV network carried Bryan’s Cross of Gold speech – or the Teapot Dome investigation – or Lincoln’s First Inaugural Address.

But political success on television is not, unfortunately, limited only to those who deserve it. It is a medium which lends itself to manipulation, exploitation and gimmicks. It can be abused by demagogs (sic), by appeals to emotion and prejudice and ignorance.

Political campaigns can be actually taken over by the “public relations” experts, who tell the candidate not only how to use TV but what to say, what to stand for and what “kind of person” to be. Political shows, like quiz shows, can be fixed-and sometimes are.

The other great problem TV presents for politics is the item of financial cost. It is no small item. In the 1956 campaign, the Republican National Committee, according to the Gore report, spent over $3,000,000 for television-and the Democratic National Committee, just under $2,800,000 on television broadcasting.

If all candidates and parties are to have equal access to this essential and decisive campaign medium, without becoming deeply obligated to the big financial contributors from the worlds of business, labor or other major lobbies, then the time has come when a solution must be found to this problem of TV costs.

This is not the place to discuss alternative remedies. But the basic point is this: Whether TV improves or worsens our political system, whether it serves the purpose of political education or deception, whether it gives us better or poorer candidates, more intelligent or more prejudiced campaigns – the answers to all this are up to you, the viewing public.

It is in your power to perceive deception, to shut off gimmickry, to reward honesty, to demand legislation where needed. Without your approval, no TV show is worthwhile and no politician can exist.

That is the way it always has been and will continue to be – and that is the way it should be.
And there is the rub - it is in our power to detect lies, reject contrivance, expose tricks, to reward honesty and decency. Can Americans still do that? Will Americans still do that?

The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.

Monday, November 14, 2011

Congress Caught Trading Stock on Insider Information

Steve Kroft of CBS 60 Minutes reported (transcript) tonight that, ‎"[I]t is not illegal for member of Congress to make stock trades using inside information they learn while working on legislation" because legislators are not part of a corporation and insider trading laws only apply to corporate employees.

Big Government reveals
Former Speaker of the House–and current Minority Leader–Nancy Pelosi apparently bought $1 million to $5 million of Visa stock in one of the most sought-after and profitable initial public offerings (IPO) in American history, thwarted serious credit card reform for two years, and then watched her investment skyrocket 203%.
In early 2008, Nancy Pelosi and her real estate developer husband, Paul, were given an opportunity to buy into a Visa IPO. It was a nearly impossible feat–one that average citizens almost certainly could never achieve. The vast majority of purchase opportunities went to institutional investors, large mutual funds, or pension funds. 
Despite Pelosi’s consistent railing against credit card companies, on March 18, 2008, the Pelosis bought between $1 million and $5 million (politicians do not have to report the exact amounts, only ranges) worth of Visa stock at the IPO price of $44 per share. Two days later, the stock price rocketed to $65 per share, yielding a 50% profit. The Pelosis then bought Visa twice more. By their third purchase on June 4, 2008, Visa was worth $85 per share.
From 60 Minutes,
We know that during the healthcare debate people were trading healthcare stocks. We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on. 
In mid September 2008 with the Dow Jones Industrial average still above ten thousand, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days. One of those attending was Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee and now its chairman. 
These meetings were so sensitive-- that they would actually confiscate cell phones and Blackberries going into those meetings. What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and treasury secretary. I mean, talk about a stock tip. 
While Congressman Bachus was publicly trying to keep the economy from cratering, he was privately betting that it would, buying option funds that would go up in value if the market went down. He would make a variety of trades and profited at a time when most Americans were losing their shirts.
Bachus' office released a statement saying, "that he never trades on non-public information, or financial services stock. However, his financial disclosure forms seem to indicate otherwise. Bachus made money trading General Electric stock during the crisis, and a third of GE's business is in financial services."

Speaker John Boehner's financial records show investments at political and financial advantageous moments.
During the healthcare debate of 2009, members of Congress were trading healthcare stocks, including House Minority Leader John Boehner, who led the opposition against the so-called public option, government funded insurance that would compete with private companies. Just days before the provision was finally killed off, Boehner bought health insurance stocks, all of which went up. Now speaker of the House, Congressman Boehner also declined to be interviewed, so we tracked him down at his weekly press conference.
Kroft: You made a number of trades going back to the healthcare debate. You bought some insurance stock. Did you make those trades based on non-public information? 
John Boehner: I have not made any decisions on day-to-day trading activities in my account. And haven't for years. I don't-- I do not do it, haven't done it and wouldn't do it.
Later Boehner's spokesman told us that the healthcare trades were made by the speaker's financial advisor, who he only consults with about once a year.
Former Speaker Nancy Pelosi has been particularly lucky at picking winning investments in initial IPO offerings.
"In 1993, Pelosi purchased IPO shares in a high-tech company named Gupta, watched the stock price leap 88% in 24 hours, then seized the profits by selling the stock the next day. The Pelosis did the same thing with Netscape and UUNet, resulting in a one-day doubling of their initial investment. Other fast and lucrative IPO flips included Remedy Corporation, Opal, Legato Systems, and Act Networks."
Later, in December 1999, Pelosi executed a stock purchase
"of between $250,000 and $500,000 in shares from high-tech company OnDisplay. A few months later, OnDisplay was bought by Vignette, which resulted in up to $1 million in capital gains for the Pelosis. What was unusual about the transaction is that Vignette’s IPO was underwritten by a major campaign contributor and longtime friend of Nancy Pelosi, William Hambrecht."
Then in November 2007,
"Pelosi bought $500,000 in the IPO for Quest Energy Partners before proceeding to champion the natural gas-related legislation that stood to significantly benefit the company. When Tom Brokaw asked her whether her significant personal investments in natural gas represented a conflict of interest, Pelosi shrugged off the question by hiding behind the crony capitalist’s false credo: "That’s the marketplace.""
Over the years, bills have been introduced to make insider trading as illegal for members of congress as it is for anyone else, but Congress makes the rules and they have let such bills die before they are introduced. This latest report demands that many heads should role in this scandal and a general house cleaning is in order, if not with immediate resignations and impeachments, then most certainly by popular vote in November 2012.

The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.

Sunday, November 13, 2011

Obamacare Headed for the Supreme Court

The Supreme Court is expected to announce as early as Monday, following a closed door consideration hearing last Thursday which, if any or all, of the six challenges o the Patient Protection and Affordable Care Act submitted for review. Only four justices need agree in private to move the petition to a full court hearing. If the court accepts any of the petitions, it's expected the subject will dominate the remaining months of the 2012 election cycle with the court hearing oral arguments in April and a possible decision sometime in June.
The string of appellate victories may not predict how the Supreme Court will decide the case. But some legal observers believe the recent decisions lay out a road map for preserving the law that may appeal even to some of the Supreme Court's more conservative members.

"They show that smart, principled conservatives can decide this is within the broad reach of Congress' power, even if they might think it is bad policy," said Richard Garnett, a law professor at the University of Notre Dame who was a clerk to former Chief Justice William H. Rehnquist.

When the states and the National Federation of Independent Business filed suit in March 2010, they questioned whether Congress, under the guise of regulating commerce, could place an unprecedented requirement on Americans to buy health insurance starting in 2014.

The so-called individual mandate was designed to spread risk more broadly and control insurance premiums, enabling the federal government to prohibit insurers from denying coverage to patients with preexisting medical conditions, a key promise of the law. Without a mandate, some Americans might avoid buying insurance until they got sick, dramatically driving up premiums.

The insurance requirement became the focus of the litigation and initially sparked a partisan split among trial judges. But more recent rulings from appellate courts around the country have significantly muddied the liberal-conservative divide.

Only the U.S. appeals court in Atlanta has struck down the mandate, in a 2-1 decision with one Republican appointee and one Democratic appointee in the majority. They called the law "breathtaking in its expansive scope."

Two other appellate courts with prominent judges appointed by Republican presidents have categorically rejected the legal attacks on the insurance mandate.
Polls continue to show that the majority American opinion is hostile to Obamacare with 54% of likely voters in an October Rasmussen poll somewhat favoring repeal while 42% strongly favor repeal of the law as opposed to 39% somewhat opposing repeal and 27% in strong opposition. Because SCOTUS is a non-elective office, justices can consider the cases free of public and political influence - at least, that was the Founder's thinking. In real life, we are all pretty sure how Justices Kagan and Sotomayor, Justices Thomas and Kennedy will vote. There will be metaphorical blood.

The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.