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Health insurers watch profits soar as they dump small business customers

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Several million previously uninsured Americans now have coverage because of Obamacare, but it could be argued that the people who have benefited most from the law—at least financially—are the top executives and shareholders of the country’s health insurance companies.

Among those who apparently have not yet benefited much at all, at least so far, are owners of small businesses who would like to keep offering coverage to their employees but can no longer afford it. They can’t afford it because insurers keep jacking their rates up so high every year that more and more of them are dropping employee health benefits altogether.

And let’s be clear, these insurers aren’t suffering. UnitedHealth Group, the largest health insurer, reported last week that it made $10.3 billion in profits in 2014 on revenues of $130.5 billion. Both profits and revenues grew seven percent from 2013.

United impressed Wall Street so much that investors pushed its share price to an all-time high. When the New York Stock Exchange closed last Thursday, United’s share price stood at $113.85, a record.  

To put that in perspective, United’s share price was $30.40 on March 23, 2010, the day President Obama signed the Affordable Care Act into law. Since then, the company’s price per share has increased an astonishing 375 percent. That’s way more than either the Dow Jones or Standard & Poors averages has grown during the same period.

United is always the first of the big six health insurers to report earnings each quarter. When investors like what they hear from United’s executives, they typically go shopping for shares in the other five as well, believing that they, too, will soon report impressive results.

That certainly happened last week. Every one of the big six saw their shares reach or come close to reaching historic highs.  Although they haven’t done quite as well as United, the other five have seen the price of their stock more than double or triple. Health Net’s share price has increased 224 percent since March 2010. Anthem’s is up 238 percent over the same time period.  Aetna’s 290 percent. Cigna’s 305 percent. And Humana’s 309 percent.

Meanwhile, the number of Americans enrolled in health plans offered by small employers continued the steady decline that started years before Obamacare went into effect.

Jeff Alter, chief executive of UnitedHealthcare’s employer and individual business, told Wall Street financial analysts last week that 60-65 percent of the country’s small businesses offered coverage to their workers in the 1990s, either through the big for-profits insurers or nonprofits like many Blue Cross and Blue Shield plans.  Now, he said, it’s down to 50-55 percent. And that trend has been just as pronounced at the nonprofits as it has been at the for-profits.

Alter didn’t offer an explanation for the decline — perhaps because he didn’t want to risk being asked about the continuing industry practice of “purging” or “dumping” unprofitable accounts, especially small business customers. At a small business, if a single employee gets sick and needs expensive treatment, that account can quickly become unprofitable for the employer’s insurer. Unfortunately, Obamacare does little if anything to stop purging.  

Aetna at one point was especially aggressive in dumping unprofitable accounts. The Wall Street Journal reported in 2004 that as part of an effort to boost the bottom line, Aetna spent more than $20 million to install new technology that enabled it to “identify and dump unprofitable corporate accounts.”

A financial analyst at Citigroup last month noted that the decline in small business accounts—or group risk, as this book of business is known in the industry—was especially notable at the country’s nonprofit Blue Cross and Blue Shield plans. Citigroup’s Carl McDonald noted that membership in the Blues’ group risk business fell almost 1 million in 2014, a 6 percent decline. He suggested the possibility that “small group dumping has been more pronounced at the Blues than has been the case at most publicly traded plans.”

One of the insurers McDonald looked at was Blue Cross Blue Shield of Tennessee. Between the first quarter of 2008 and the third quarter of last year, enrollment in that insurer’s group risk business fell almost 20 percent, from 603,918 to 486,010.  Meanwhile, the percentage of premium revenue BCBS of Tennessee devoted to paying claims in its group risk business fell like a rock, from 82.2 percent in 2008 to 73.9 percent in 2014, according to McDonald’s analysis.

The ACA requires insurers to spend at least 80 percent of premiums they collect from individuals and small businesses on actual medical care. If they don’t, those insurers have to send rebates to their customers. BCBS of Tennessee has had to do that for at least the past two years.

Most of the other nonprofit Blues also spent less on care as a percentage of premium revenues in the group risk business at the end of last year than in 2008 (although the change wasn’t as dramatic at most of the other Blues plans as it was in Tennessee). What that indicates to me is that those nonprofit insurers have methodically been “dumping” small businesses with the sickest employees year after year.

You’d hope that with all the new revenue insurers are raking in because of Obamacare, they’d consider giving small business owners and their workers a break.

Don’t hold your breath.

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.

Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2015/01/26/16658/health-insurers-watch-profits-soar-they-dump-small-business-customers

National donors pick winners in state elections

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If money is influence, the Republican Governors Association wielded more of it than anyone else last year in state elections nationwide. 

The group, led in 2014 by New Jersey Gov. Chris Christie, gave roughly $69 million to candidates, political parties and independent groups — more than double its Democratic counterpart  — as it tried to elect Republicans to the top office in as many states as possible.  The group gave more than any other donor to state-level elections last year — from races for governor to legislator to supreme court justice.

The association applied an effective strategy that’s becoming more common: giving money using multiple paths to circumvent limits on campaign contributions to candidates and parties, a Center for Public Integrity analysis has found.

In addition to the money it spent directly on TV ads and other campaign efforts, the group gave about $14 million to candidates including Illinois’ new Republican Gov. Bruce Rauner. It also gave more than $3 million to state parties, including those in Texas and Maine. 

The bulk of the checks it wrote, however, totaling about $50 million, went to other political groups that in turn spent the money on state races.

Its efforts largely paid off. Republicans gained four governorships in 2014 and only lost two, leaving them holding the reins in 31 states.

The group “was designed to supplement what candidates could do on their own in the states,” said Dick Thornburgh, a former Pennsylvania governor who turned the association into a powerhouse in the mid-1980s. “Obviously, it’s grown beyond that.”

Its competitor, the Democratic Governors Association, gave $32 million and ranked second among the sugar daddies of 2014, according to the Center for Public Integrity’s analysis. The group only picked up one new governor’s mansion, with Pennsylvania’s Tom Wolf defeating incumbent Republican Tom Corbett. (Alaska's Republican incumbent was beaten by an independent, Bill Walker.)

Together, the two governors' groups and other national political organizations gave significantly more than political partiesunions, multimillionaires or corporations that also contributed heavily to influence state-level campaigns. The donations went beyond races for governor. The funds made their way into lower-ballot contests such as attorney general, state supreme court justice and state legislator.

The national groups also cropped up on the lists of the biggest donors in most states, outgiving homegrown political players in a sign that all politics may now be national. 

In all, the top 50 political givers spread more than $440 million to the people and groups pushing candidates for state office, the Center for Public Integrity found. The list is thick with billionaires such as former New York City Mayor Michael Bloomberg, unions such as the American Federation of Teachers and corporations such as telecom titan AT&T Inc. 

They also were more successful in backing winners than most donors, becoming the de facto kingmakers of state politics. 

“It’s an amazing amount of power concentrated in a handful of organizations,” said Ed Bender, executive director of the National Institute on Money in State Politics that collected some of the data used for the analysis. “If people want to understand why government is dysfunctional, you don’t have to look much farther than this list.”

The Citizens United effect

To identify the kingmakers, the Center for Public Integrity looked at donations given to 2014 state candidates and political parties during 2013 and 2014, as tracked by the National Institute on Money in State Politics. Reporters also collected state and federal contribution records for 140 independent organizations that aired political TV ads during 2014 state elections.

The analysis does not include funders of groups that don’t disclose their donors to any state or federal agencies — so-called “dark money” groups. And it does not total overall contributions, because some donors received money from other donors on the list. [More details on the methodology.]

The findings paint a picture of independent groups playing a bigger role in financing state-level elections than even political parties or the candidates’ campaigns, one effect of the landmark U.S. Supreme Court case Citizens United v. Federal Election Commission. The 2010 ruling allowed many groups to accept and spend unlimited amounts of money from corporations, unions and wealthy patrons to influence elections as long as they did not coordinate with the candidates. Thus, they could bypass limits on giving to a candidate or political party and leapfrog ahead.

The top 50 donors identified by the Center for Public Integrity gave more than 40 percent of their contributions to independent political groups, surpassing what they gave to either candidates or political parties.

The strategy allows donors to multiply their influence, said Larry Noble, former general counsel of the FEC who now works as an attorney at the Campaign Legal Center.
 
“You give the maximum to the candidates, but then you want to give more,” he said. “You give to the party committee that’s also going to support the candidate. You give to outside groups that are also going to support the candidate.”

The mega-donors thus control more of the political messages that determine which issues are central to the campaign — roles previously played by candidates and political parties. And in exchange, they may expect the newly elected officials to dance with the ones that brought them.

Behind the curtain

National political groups have their own heavy-hitting donors. But because the groups function as the middlemen of political giving, voters often don’t know the original source of the cash behind a politician’s election.

The Republican Governors Association, for one, served as a conduit for billionaires and corporations looking to influence governors’ races. 

The five largest contributors behind the group's gargantuan giving power all appear separately on the Center for Public Integrity’s top 50 donor list: Las Vegas casino magnate Sheldon Adelson; billionaire David Koch, who runs the Kansas-based Koch Industries with his brother; electricity giant Duke Energy; investment firm ETC Capital, whose founder, Manoj Bhargava, also founded the company behind the 5-Hour Energy drink; and billionaire hedge-fund manager Paul Singer, according to IRS records from 2013 and 2014.

Meanwhile, four of the five largest contributors to the counterpart Democratic Governors Association were also familiar names from the top 50 list: Michael Bloomberg and branches of three labor unions — the American Federation of State, County and Municipal Employees, the National Education Association and the Service Employees International Union. 

The Republican and Democratic governors' associations employ another common strategy that both amplifies and obfuscates their giving: contributing to “an outside group with a good-sounding name” to make support of a candidate look more diverse and to help attract different constituencies, Noble said.

For example, state records collected by the Center for Public Integrity show that the Democratic Governors Association gave more than $6 million to a group called Making Colorado Great, while the Republican Governors Association gave nearly $5.5 million to Grow Connecticut. The Colorado and Connecticut organizations then spent millions airing TV ads in their states’ respective gubernatorial contests.

“It’s name branding,” Noble said. “If you were a teacher and you see an ad from a teachers union, you’re going to give it a lot more credibility than an ad from the DGA.”

Diverse giving becomes trendy

All but a handful of the top 50 mega-donors used more than one avenue to spread their gifts. And most gave money to influence races in more than one state. 

Billionaire hedge-fund manager Kenneth Griffin, for example, gave more than $4.6 million before the election to the campaign committee of Rauner, the Illinois Republican gubernatorial candidate, according to data from the National Institute on Money in State Politics

Worth about $5.5 billion, according to Forbes, Griffin and his soon-to-be ex-wife Anne also gave at least $2.2 million to independent political groups that backed state candidates, such as the Republican Governors Association, and more than $500,000 to state GOP parties in Illinois and Florida.

A representative for Griffin declined to comment.

Some of the top donors also gave widely. Sixteen of the top 50 contributors gave to 50 or more state-level candidates running in 2014.

Getting what they paid for

Nearly 85 percent of the candidates backed directly by the top 50 donors won their elections in 2014,  a far better success rate than the typical political contributor, who backed winners only 52 percent of the time.

Duke Energy, for example, had a 94 percent success rate after supporting 381 different candidates.  

For corporations, in particular, political giving is a way to ensure a seat at the table once a lawmaker is elected, said Loyola Law School Professor Justin Levitt. Giving across the aisle improves their odds of having an ally in office come January.

“They’ll give to the incumbent and also the challenger just in case the challenger wins,” Levitt said. “They’ll give more to leadership positions because leadership positions are gateways to access for committees, for legislation, for broader regulation.”

Mass media giant Comcast picked winners in 93 percent of the more than 1,000 candidates it backed. It gave nearly $1.7 million directly to candidates, spreading it widely in 36 states. 

“The contributions that the company makes are because we operate in a highly regulated industry,” said Comcast spokeswoman Sena Fitzmaurice, adding that most candidates backed are incumbents. “The decisions that are made by legislatures control our business.”

In addition to its national giving, the Philadelphia-based Comcast gave heavily in its home state. Top recipients were Gov. Tom Corbett and running mate Jim Cawley, both Republicans, who together raked in $107,000 from the state’s top broadband provider but lost re-election. Hedging its bet, Comcast also gave $1,000 to Wolf, who won the governorship from Corbett.

Duke Energy, another company regulated by states, divvied up more than $500,000 among the hundreds of candidates it backed, many of whom ran for office in North Carolina, where the company is headquartered. 

Additionally, the electric utility donated more than $210,000 to the Republican Party of Florida, according to the National Institute on Money in State Politics.  Duke Energy may have been trying to boost its support in the Sunshine State, where it has faced massive criticism for charging customer fees for nuclear plants that do not — and may never — provide power. Florida’s governor and legislature are responsible for naming the members of the commission that regulates the utility and allows such fees. 

"We do not make contribution decisions on single issues,” Duke Energy spokesman Chad Eaton said. “Our employee-led PAC considers an array of issues before any decisions are made.” 

In general, he said, Duke Energy donates to candidates who demonstrate “support for public policy issues that are important to our business, customers and communities” in the six states where it provides electricity. 

The International Brotherhood of Electrical Workers, meanwhile, gave nearly $2.7 million to 568 candidates in 34 states and had a 64 percent win rate. It contributed more than half million dollars to Democrat Pat Quinn’s failed bid to retain the Illinois governorship, but saw more success with the $410,000 it gave to Wolf’s successful run for governor in Pennsylvania. In both states, the Republican opposition had supported scaling back public pensions or preventing unions from deducting union dues directly from members’ paychecks.

Money does not always guarantee a win, of course, and a lack of funds doesn’t necessarily foretell a loss.

In Maryland’s governor’s race, former Lt. Gov. Anthony Brown, a Democrat, outraised Republican Larry Hogan several times over yet lost in one of the biggest upsets of election night. Brown was hurt by low popularity ratings that no giant war chest could fix, according to Todd Eberly, a political science professor at St. Mary’s College of Maryland. And because Hogan accepted public funds for his campaign, he was limited on how much money he could spend yet also freed up to spend time on the campaign trail, not the fundraising one.

And some of the top benefactors saw little return on their campaign investments. 

Billionaire physicist Charles Munger Jr., son of the Berkshire Hathaway executive of the same name, gave nearly $300,000 to 45 Republican candidates in 2014. Only 13 won for a 29 percent success rate. 

The nation’s largest teachers union, the National Education Association, also fared poorly when backing candidates directly — only three of their 13 candidates won. 

Allies in office

Most of the more than 6,300 state officials elected in November began work this month, shaping and creating policy across the country in 50 governors’ mansions and 99 legislative chambers — 11 of which flipped from Democratic to Republican control in the 2014 election. 

For some big donors, that means the candidates they backed can now fight for their causes in state office. Or they might just be more willing to take a phone call from a benefactor who has a legislative wish list.

Noble said candidates typically know which donors they have to thank for their success — even when patrons filter their donations through independent groups. 

And now, for some top givers, the real campaigning is about to begin.

Rauner, the newly sworn-in Republican governor, for one, is already gearing up for battles with the veto-proof Democratic-controlled legislature in Illinois as he pushes his stated goals of plugging the state’s budget deficit and strengthening ethics laws. He isn’t just counting on good will or smooth talking to win over potentially reluctant legislators. He’s counting on cold, hard cash to help make the case.

Rauner and two top donors, Griffin and shipping supply magnate Richard Uihlein, poured $20 million into the governor’s campaign committee in the final two days of 2014, which Rauner reportedly plans to use to back other candidates who support his policies.

Rauner’s new war chest will enable the new governor to be in a state of “perpetual campaign” — to air commercials aimed at persuading state legislators or to donate to other lawmakers’ re-election campaigns in exchange for support of Rauner’s agenda, said Christopher Mooney, director of the Institute of Government and Public Affairs at the University of Illinois, Springfield.

In the past, a governor might have promised state legislators financial backing for development projects in their districts or helped them acquire contracts or new jobs.

“Instead of building somebody a playground in the school, he'll be able to donate money to their campaign,” Mooney said. 

And if they don’t do want he wants? “He'll be able to fund an opponent,” he said.

Former chairman of the Republican Governors Association N.J. Gov. Chris Christie makes his way through a crowd in Johnston, Rhode Island, while campaigning for Rhode Island Republican gubernatorial candidate Allan Fung in October 2014. Ben Wiederhttp://www.publicintegrity.org/authors/ben-wiederKytja Weirhttp://www.publicintegrity.org/authors/kytja-weirReity O'Brienhttp://www.publicintegrity.org/authors/reity-obrienRachel Bayehttp://www.publicintegrity.org/authors/rachel-bayehttp://www.publicintegrity.org/2015/01/28/16661/national-donors-pick-winners-state-elections

Obama administration to open Atlantic coast to drilling, handing victory to governors group

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For proponents of expanded domestic oil and gas production, the Obama Administration hath given, and it hath taken away. The administration on Tuesday set aside sections of the Alaskan Arctic Ocean for permanent protection, but also announced it would open parts of the Atlantic coast to drilling. That will come as good news to a coalition of governors with close ties to industry that was the subject of a Center investigation last fall.

The move came in a pair of announcements from the White House and the Interior Department, which released a draft plan for drilling off the nation’s coasts.

“It takes a balanced approach to oil and gas development,” said Interior Secretary Sally Jewell, in a call with reporters.

The draft, part of the “Five Year Program” that governs offshore drilling for 2017-2022, would for the first time in decades open access to a stretch of the coast from Virginia to Georgia, though the department has yet to determine where exactly any leasing would occur. That decision, which will take years, is to be based on studies about environmental risks, oil and gas reserves and input from various stakeholders.

The plan would also include a 50-mile “coastal buffer,” to minimize impacts on fishing, tourism, military and other activities. But the announcement drew swift criticism from environmental advocates, who say drilling in the Atlantic would harm other economic sectors that rely on clean water and undeveloped shorelines.

While any drilling is years away and could still be cancelled, the announcement hands a major victory to the oil and gas industry and to the governors of Virginia, North Carolina and South Carolina. As the Center reported in November, the three governors — Terry McAuliffe, Pat McCrory and Nikki Haley — have been working behind the scenes with an energy industry lobbying group to promote offshore drilling through a group called the Outer Continental Shelf Governors Coalition.

In a statement, McCrory said he “applauded” the decision to open parts of the Atlantic to drilling, but regrets both the 50-mile buffer and the fact that other areas such as the Eastern Gulf of Mexico were not included. “I, along with other OCS Governors Coalition members, will continue to push for the opening of offshore areas in which state leadership supports development,” McCrory said.

The Center’s report, based largely on thousands of pages of public records, detailed a close relationship between the governors and the industry. Since its formation in 2011, the coalition of seven coastal governors has actually been managed by the Consumer Energy Alliance, which is funded in part by the energy industry and has provided the governors with research and talking points for meetings with federal officials. In February 2013, four governors met with Jewell at a Washington, D.C. hotel to push the secretary to open the Atlantic to drilling and expand opportunities elsewhere.

On Tuesday, Jewell said her department had heard from 22 governors about the draft plan and gave great weight to their input, though it was just one of a number of factors the department considered when deciding where to allow drilling.

Timed with the release of the draft plan, Obama on Tuesday announced that he would use executive action to protect from future drilling nearly 10 million acres of the Chukchi and Beaufort seas in Alaska. “There are some places that are simply too special to drill,” Jewell said during the call.

That decision came on the heels of an announcement Sunday that Obama would ask Congress to extend wilderness protection to portions of Alaska’s Arctic National Wildlife Refuge, which energy companies have long sought to have opened to drilling.

On Monday, the Consumer Energy Alliance launched a campaign “to promote public awareness of Arctic issues and the importance of the Arctic region to the United States.” In the statement announcing the Arctic for All campaign, CEA President David Holt said the administration’s wilderness request for the Arctic National Wildlife Refuge was “misguided.”

In this Dec. 29, 2012 file photo provided by the United States Coast Guard, the tugs Aiviq and Nanuq tow the mobile drilling unit Kulluk 80 miles southwest of Kodiak City, Alaska. In January, 2015, President Obama announced the protection of nearly 10 million acres of sea in Alaska from offshore drilling.  Nicholas Kusnetzhttp://www.publicintegrity.org/authors/nicholas-kusnetzhttp://www.publicintegrity.org/2015/01/28/16668/obama-administration-open-atlantic-coast-drilling-handing-victory-governors-group

Republican bills take aim at EPA science, rulemaking

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Even when Democrats controlled the Senate, Republicans found ways to put limits on the Environmental Protection Agency.

As the Center for Public Integrity reported last week, Republicans used the appropriations process to make it harder for the EPA to evaluate the dangers posed by toxic chemicals. Without the science, the EPA cannot enact new regulations to protect the public.

Now, with the GOP takeover of the Senate, the EPA faces the prospect of several bills passing both chambers of Congress that would make it even more difficult for the agency to issue rules.  This time the White House is threatening to veto the bills.

Here’s a rundown of the pending legislation:

Secret Science Reform Act

H.R. 4012, which passed the House late last year, would prohibit the EPA from taking any action that relied on scientific research unless all the data were published online.

Rep. Lamar Smith, the Texas Republican who chairs the House Committee on Science, Space and Technology, said at a hearing last summer that the public has a right to see the underlying data the EPA relies on.

“If the EPA has nothing to hide, and if their data really justifies their regulations, why not make the information public? Is it because the EPA knows the data won’t justify their regulations?

But the EPA rarely does its own scientific studies. It relies instead on research published in hundreds of peer-reviewed scientific journals.  The agency usually doesn’t have all the underlying data to share.

EPA Administrator Gina McCarthy fired back at House Republicans in a speech last year, saying, “If EPA is being accused of ‘secret science’ because we rely on real scientists to conduct research, and independent scientists to peer review it, and scientists who've spent a lifetime studying the science to reproduce it -- then so be it!”

Environmental groups argue the bill “favors industry interests and undermines the EPA’s scientifically rigorous and comprehensive decision-making process. This bill, put simply, is an attempt to tie the hands of EPA, and nothing more.”

The White House says it would welcome legislation that increases transparency at the EPA but threatens to veto this bill, saying it “would impose arbitrary, unnecessary, and expensive requirements that would seriously impede the Environmental Protection Agency’s ability to use science to protect public health and the environment.

EPA Science Advisory Board Reform Act

H.R. 1422, which also passed the House late last year, sets new rules for who can advise the EPA on scientific matters.

“Despite a statutory requirement that EPA’s advisory panels be ‘fairly balanced in terms of point of view represented,’ the Agency routinely excludes private sector expertise,” said Rep. Chris Stewart, R-Utah.

Current rules require the EPA to have a balance of views on advisory boards. And many industry scientists already serve on them.

But Stewart said 22 advisors asked to review the EPA’s hydraulic fracturing research “had no experience in hydraulic fracturing and no understanding of current industry practices.”

 The bill would allow scientists who have financial conflicts of interest to serve on advisory panels. But it wouldn’t allow scientists to “participate in advisory activities that directly or indirectly involve review or evaluation of their own work.”

Critics say that would keep the scientists with the greatest expertise from participating while allowing those with financial conflicts to stay involved.

“This bill opens the door for more corporate influence on the Board,” said Andrew Rosenberg of the Union of Concerned Scientists. “It creates roadblocks for academic experts to meaningfully participate… This effectively turns the idea of conflict of interest on its head, with the bizarre presumption that corporate experts with direct financial interests are not conflicted while academics who work on these issues are.”

The White House has threatened to veto the bill, saying it “would negatively affect the appointment of experts and would weaken the scientific independence and integrity of the” scientific advisory boards.

Regulatory Accountability Act

The House this year has already passed H.R. 185, which affects all regulatory agencies, not just the EPA.  It dramatically changes the way agencies can create new regulations, requiring them  to consider all possible alternatives and choose the one that is least costly.

Rep. Bob Goodlatte, R-Va., said his bill “is a strong, bipartisan solution to the problem of overreaching, ill-considered, and excessively costly federal regulation. The bill requires the executive branch to execute the laws passed by Congress in the least costly way, and with better public input, to find the most efficient regulatory solutions that benefit all Americans.”

But critics say the bill would make it much more difficult for agencies to enact new regulations.

“We must not allow efforts to continue which undermine critical safeguards and ensure gridlock to the federal rulemaking process,” said Kendra F. Brown of the environmental group Earthjustice. “We must do what protects the people. The RAA seeks to turn the process by which federal protections are created into a black hole.”

The White House is threatening to veto the bill, saying, “The Regulatory Accountability Act would impose unnecessary new procedures on agencies and invite frivolous litigation.”

Rep. Lamar Smith, R-Texas speaks during a news conference on Capitol Hill in August of 2010. David Heathhttp://www.publicintegrity.org/authors/david-heathhttp://www.publicintegrity.org/2015/01/29/16672/republican-bills-take-aim-epa-science-rulemaking

Senate transparency push gets new GOP allies

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A bipartisan group of lawmakers will soon float a bill requiring U.S. Senate candidates to electronically file campaign finance documents, the Center for Public Integrity has learned.

Known as the Senate Campaign Disclosure Parity Act, the bill — which the Congressional Budget Office estimates could save taxpayers about $500,000 a year — aims to sync the Senate with what’s currently required for U.S. House candidates, presidential candidates and political action committees.

But like previous iterations of the bill, the Senate Campaign Disclosure Parity Act is likely to die an unceremonious death, buried in the docket of a Senate subcommittee. That’s because Sen. Mitch McConnell, R-Ky., has previously stymied the legislation, and now as Senate majority leader, his power to shape legislative priorities is stronger than ever.

Nevertheless, supporters of the bill hope to win over converts.

“For too long, senators have hidden behind an outdated filing system that wastes taxpayers’ money and isn’t transparent,” Sen. Jon Tester, D-Mont., who will be the bill’s chief sponsor, said in a statement.

“Transparency in politics and saving taxpayers’ money is not a partisan issue,” Tester added. “This is a commonsense step that will improve our broken campaign finance system.”

Already, Tester has earned a few new allies.

At least three of the 12 newly elected Republican senators tell the Center for Public Integrity they’re sympathetic, as is Sen. Gary Peters, D-Mich., the sole new Democratic freshman senator.

“It’s time to bring Senate campaign reporting into the 21st century,” Sen. Cory Gardner, R-Colo., said in a statement.

Gardner added that it was “long past time for the Senate to be held to the same standard” as the U.S. House of Representatives, where Gardner previously served for four years and where candidates must, by law, e-file their campaign finance reports.

Sen. Steve Daines, R-Mont., will also be supporting the new e-filing legislation.

“This bill is a commonsense measure to increase transparency and ensure that taxpayer dollars are used more effectively,” said Daines spokeswoman Alee Lockman.

Additionally, Sen. Thom Tillis, R-N.C., “would be supportive of e-filing requirements at the federal level if the implementation grants candidates and committees ample time to prepare for the new law,” said his spokesman Daniel Keylin. 

Officials with the other freshmen Republican senators either declined to comment or did not respond to requests.

A spokesman for McConnell also did not immediately respond to requests for comment.

Lisa Rosenberg, a lobbyist for the Sunlight Foundation, which supports e-filing, called the bill a “no-brainer” that should be “a non-issue.”

Last year, the legislation was supported by more than half of the Senate, though it never received a vote on the Senate floor. This year, however, Rosenberg says, it could be even more challenging to pass the Senate Campaign Disclosure Parity Act.

“Considering we couldn’t get this bill passed when the Democrats had the majority, I’m not optimistic that we’ll get the bill passed now that Mitch McConnell is running the show,” she said.

While it is not required by law, some senators — mostly Democrats but also a few Republicans and the Senate’s two independents — choose to e-file copies of their campaign finance reports with the Federal Election Commission.

 

 

From left: Sen. Jon Tester, D-Mont., and Senate Majority Leader Mitch McConnell, R-Ky.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2015/01/29/16674/senate-transparency-push-gets-new-gop-allies

Deadbeat politicos outrun federal enforcers

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Go ahead: Break election laws and violate tax rules, inviting federal fines you never pay.

You might just end up like civil rights leader Al Sharpton, who now hosts MSNBC’s “PoliticsNation,” a nightly news show that serves as a de facto soapbox for his liberal political views.

On the program, Sharpton regularly defends the IRS, a division of the U.S. Treasury Department, against conservatives’ criticism that the agency gave special scrutiny to right-leaning nonprofit groups,

“There was no conspiracy for the IRS to target conservatives. So why are some Republicans so obsessed about all of them?” Sharpton shouted during a show last February.

What Sharpton doesn’t tell viewers is that his 2004 presidential committee owes the U.S. Treasury $19,500 a decade after being caught accepting illegal campaign contributions, according to federal records. It also owes the Federal Election Commission several thousand dollars in unpaid fines, even after paying off a separate $208,000 penalty in 2009 for several campaign violations.

Sharpton’s saga, while extreme, is hardly unique.

Dozens of political committees together owe government agencies — and therefore, taxpayers — more than $1 million in outstanding penalties, back taxes and other liabilities, a Center for Public Integrity analysis of federal records shows. Some debts are more than 15 years old.

The government’s anemic campaign law enforcement efforts and plodding debt collections process are largely to blame for this growing cache of overdue debt, owed by Democrats and Republicans alike. Overburdened regulators spend little time chasing offenders, especially political committees that fade into insolvency and irrelevancy after violating the law.

Consider the FEC: Tasked by law with fining political committees that break election laws, the agency itself has no real power to make them pay.

And the way the laws are written, the politicians themselves, including also-ran presidential candidates Newt Gingrich, Herman Cain and Gary Bauer, aren’t personally responsible for the debts their campaign committees have incurred.

Debtor political committees offer various reasons — no money, no staff, standing on principle against the government — for not paying money federal officials say they owe. Some offer no reason at all.

The situation is “disturbing,” said FEC Chairwoman Ann Ravel, a Democrat, who acknowledged the FEC can’t do much about political committees that don’t voluntarily pay their fines.

“Only when there are real consequences is there respect for the law,” Ravel said. “There aren’t real consequences now.”

Excuses, excuses

Don’t expect Sharpton to pay the government anytime soon.

Sharpton spokeswoman Jacky Johnson this week offered no timetable for payment of the lingering debts, which rank among Sharpton’s numerous financial woes, both personal and political.

Former Sharpton spokeswoman Rachel Noerdlinger told the Center for Public Integrity in 2013 that Sharpton intended to address his campaign debt problems. But as of late last year, his old campaign still owed a host of creditors more than $880,000.

MSNBC spokeswoman Rachel Racusen declined to comment on Sharpton’s situation or the money his presidential committee owes the Treasury and FEC.

Gingrich, for his part, is Sharpton’s debt-dodging analogue among Republicans.

Federal records from October indicate Gingrich’s “Newt 2012” presidential campaign owed the IRS $26,507 for an “income tax liability” and “income tax payment” as of Sept. 30.

Newt 2012's IRS debt is just one of dozens that his campaign still owes to entities ranging from Comcast to Twitter to Herman Cain Solutions, a political and consulting organization run by its namesake, the former 2012 Republican presidential candidate. The debts are together worth more than $4.6 million; Newt 2012 raised a meager $37,822 during 2014's fourth quarter, with about half that money coming from the campaign renting the personal information of supporters to a data broker. 

Taylor Swindle, chief financial officer for Gingrich’s media company Gingrich Productions, said this week the Newt 2012 committee has “paid off the IRS since that October filing.” An updated disclosure Newt 2012 made Wednesday with the FEC indicates the committee paid off most of its IRS debts in late 2014 but still owed the tax agency $1,007 as the new year began.

Gingrich until last year served as co-host of CNN’s now-defunct “Crossfire.” He remains a regular commentator for the news network and a staunch critic of the IRS in recent years,writing in 2013 that “President Obama owes Americans an explanation as to why he looked the other way while the IRS continued its evasion and dishonesty” following revelations that the agency targeted some conservative nonprofits with extra scrutiny.

CNN spokespeople did not respond to numerous requests for comment.

Cain, in all likelihood, would welcome the $16,525 Gingrich’s campaign owes him.

That’s because Cain’s own 2012 presidential campaign committee, Friends of Herman Cain, still owes the FEC $12,500 stemming from a fine for accepting more than $186,000 in improper campaign contributions, then not refunding them in a timely manner. The Cain committee on March 27 settled with the FEC and agreed to pay a $19,000 penalty, which is due in full two months from now.

Friends of Herman Cain spokesman Mark Block, who earned minor fame during 2011 thanks to a quirky Cain campaign commercial where he smokes a cigarette, said in an email that the committee “will be in compliance” with its debt payment agreement come March.

Cain now hosts a syndicated, self-titled radio show that airs weekdays.

One of the oldest debts still on the federal government’s books belongs to the 2000 presidential campaign committee of Bauer, a Republican and longtime political operative who now leads Virginia-based conservative nonprofit group American Values.

Bauer’s campaign owes the IRS $10,454, federal records show. Bauer spokeswoman Kristi Hamrick said, “The plan is to repay that.”

In recent years, Bauer, like Gingrich, has been an outspoken critic of the IRS. In a 2014 message to supporters, for example, Bauer accused the IRS of “left-wing corruption.”

Long collection process

Many political committees pay their FEC fines and IRS taxes promptly.

But those who don’t should expect a protracted collection process that, in the end, doesn’t amount to much.

For fines generated by the FEC, here’s how the collection process works — or doesn’t: Once the FEC slaps a political committee with a penalty, its legal office drafts an agreement that usually demands full payment in 30 days.

If a committee doesn’t pay, the FEC sends a warning letter.

After 180 days, the FEC refers the offending committee to the Treasury and eventually transfers the unpaid fine to that agency for collection.

At that point, the FEC, which hasn't had a general counsel since mid-2013, more or less gives up on collecting on its fine, unless it chooses to sue a committee in federal court, which these days, it almost never does.

Treasury’s Bureau of the Fiscal Service might use any of several methods to compel debtors to pay up. They include reporting them to credit bureaus, garnishing wages, siccing private collection agencies on them or “referring debts to the Department of Justice for action.”

The Department of Justice, however, rarely takes action against deadbeat political committees except in the most extreme circumstances. In 2013, it pursued Rep. Jesse Jackson Jr. for stealing hundreds of thousands of dollars from his campaign to buy high-end electronics, a Rolex watch and the like. (Jackson’s campaign committee also owes the government more than $16,000 for election law violations.)

Most FEC fines only name a political committee, not a human being, as responsible for paying, rendering threats like garnishing wages or dinging credit toothless. The FEC does not have statutory power to make a political candidate responsible for the debts of his or her political committee.

The Bureau of the Fiscal Service also lacks the resources to pursue every debt under its purview with equal vigor. It employed the equivalent of 108 full-timers during 2014 to handle all federal debt collection efforts, according to federal budget records. IRS spokesman Bruce Friedland declined to comment. Treasury spokesman Daniel Watson said his agency's debt collection efforts, detailed in a document on its website, speaks for itself.

“Some of the debts are too small for them to consider worthwhile,” said Larry Noble, who served as the FEC’s general counsel from 1987 to 2000. “Meanwhile, meaningful enforcement for groups that don’t comply [with the law] has pretty much broken down.”

Ravel, the FEC chairwoman, said she plans to contact Treasury officials to discuss options for more aggressively collecting political committees’ debts. Matthew Petersen, the FEC’s Republican vice chairman, could not be reached for comment.

Fight the debt

Leaders of some political committees say they’re going to fight, or even ignore, their government debts.

Julien Modica, a Democrat who unsuccessfully ran for U.S. Senate in Virginia in 2012, says the FEC failed to consider he was caring for his dying father in Great Britain when it fined his campaign for three election law violations.

The FEC says Modica’s committee owes nearly $27,000.

Modica, whose Modica for Senate committee is broke, says he will fight the FEC in federal court in a bid to clear the fines.

“I’m an asshole when it comes to paying people off who don’t deserve to be paid,” Modica said. “They took advantage of me. I’m frustrated. You don’t know the effort I put into telling these FEC people to knock it off, and they wouldn’t listen. It’s harassment.”

Joseph R. John, chairman of the Combat Veterans for Congress PAC, contends former IRS nonprofit division chief Lois Lerner — a scourge of many conservative activists for her staff’s role in the conservative nonprofit targeting scandal — is responsible for convincing the FEC in 2011 to fine his political action committee.

As far as the federal government is concerned, the California-based committee, which reported about $5,600 in available cash through Dec. 31, owes it about $8,700.

“We were absolutely blameless of all charges and have not recognized or paid the illegal fine imposed because of Lois Lerner's influence,” John said.

Dan Backer, a conservative election law attorney who represents Combat Veterans for Congress PAC, says the committee will continue to fight the fines as long as it has recourse. A hearing on the fine is scheduled for next week in federal court.

Strength and Liberty PAC, which spent $20,000 to oppose Republican presidential candidate Mitt Romney during 2012, is pleading poverty for not paying $3,300 it’s owed the government for more than two years after not filing campaign disclosures on time.

“The committee has no money,” Strength and Liberty PAC treasurer Louis Barnett said. “I don’t know what else to tell you.”

Then there’s the Missouri Democratic State Committee. Officials there said they aren’t exactly sure why they owe $5,675 to the IRS.

Their own disclosures last year to the FEC indicate the debt is related to it receiving “excessive contributions” it never disgorged. It’s one of a dozen debts on the committee’s books.

Michael Toner, a Republican lawyer and former FEC chairman, says the government must balance holding political committees accountable with the value of investing time and resources into making small-time political actors pay them money they won’t ever have.

“You can’t get blood out of a turnip,” Toner said.

But Rep. John Sarbanes, D-Md., who’s sponsored numerous pieces of campaign finance reform legislation, disagrees.

“There ought to be aggressive enforcement because there should be consequences for going against the law regardless of who you are,” Sarbanes said. “For too many committees, fines are just a cost of doing business to them.”

If all else fails, there’s one sure-fire way to avoid paying an FEC fine: die.

That’s what 85-year-old Abe Hirschfeld did in 2005, the year after the FEC fined his “Honest Abe Hirschfeld for United States Senate” committee more than $105,000 for six separate campaign finance violations.

A decade later, Honest Abe still appears in no hurry to pay his penalties.

From top left: Gary Bauer, the Rev. Al Sharpton, Newt Gingrich and Herman Cain.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2015/01/30/16677/deadbeat-politicos-outrun-federal-enforcers

Hybrid PACs generating few greenbacks

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There's a certain irony that Ready for Hillary is probably the nation's most renowned hybrid political action committee, since this curious kind of political group likely wouldn't exist but for a Supreme Court decision sparked by a roundly anti-Hillary Clinton movie.

Late Saturday night, the group, which is dedicated to supporting a Hillary Clinton presidential run, reported raising $8.9 million during 2014 — among the biggest hauls for any political group that publicly discloses its funders.

That includes about three-quarters of a million dollars raised during the year’s final five weeks.

But Ready for Hillary is an anomaly: Hybrid PACs, legalizedin 2011, haven’t really caught on in American politics.

While it may be premature to deem hybrid PACs utter failures like the New Coke or Edsel, they’re turning out to be a specialty product heading into Election 2016.

The result is surprising because hybrid PACs can offer one stop shopping to eager political donors.  Like the more popular super PACs, they can raise and spend unlimited amounts of cash to advocate for and against candidates, while at the same time they can operate a traditional political action committee, collecting limited amounts of money to give to politicians’ campaigns. All they need to do to keep it legal is maintain separate bank accounts for the different pools of money.

However most political donors, it appears, are happy to keep those activities separate.

Perhaps the one person who's benefited from hybrid PACs more than any other is Dan Backer, a conservative attorney and the driving force behind Carey v. Federal Election Commission, the 2011 federal court case that led to the creation of hybrid PACs.

Backer himself works as treasurer for 13 of the 86 existing hybrid PACs — better than one in seven, according to FEC records.

Three years ago, he declared that any super PAC — like Ready for Hillary — that didn’t morph into a hybrid PAC was “run by idiots.”

“My thought is that we’ll never say ‘super PAC’ again in 10, maybe five years,” Backer said at the time.

Backer had reason for such confidence, as numerous hybrid PACs winked into existence during late 2011 and early 2012.

But their popularity soon waned, and super PACs and politically active nonprofit groups evolved into far more popular vehicles for those looking to influence elections in the post-Citizens United v. FEC era of politicking.

Today there are 919 super PACs, according to FEC records, compared to 86 hybrid PACs— most of which have raised little money.

“’Hybrid PAC’ — it’s just not as cool and catchy a name as ‘super PAC,’” Backer mused.

Adam Smith, a spokesman for campaign finance reform group Public Campaign, agreed.

“Hybrid PACs make a lot of sense in a way, because they offer the ease of one-stop shopping,” he said. “But most people have never heard of them. I don’t think you’ll see too many of these hybrid PACs in the future.”

Like Ready for Hillary, a few other hybrid PACs posted impressive cash hauls this weekend, the deadline for all federal political committees to release their end-of-year fundraising numbers. Those groups include:

  • Patriot Voices PAC, a pro-Rick Santorum hybrid PAC, reported more than $437,000 cash on hand going into this year. Much of that comes from a $250,000 contribution on Dec. 31 from investor Foster Friess, who spent millions of dollars supporting Santorum during the 2012 presidential election. Two corporations — Martin’s Famous Pastry Shoppe Inc. of Pennsylvania and the North Dallas Honey Company LP of Texas — also made sizable donations.
     
  • The Tea Party Leadership Fund, a Backer group, which ended the year with more than $166,000. 
     
  • Texans for a Conservative Majority, which helped beat back a Republican primary challenge against Sen. John Cornyn, R-Texas, from ex-Rep. Steve Stockman, R-Texas, ended 2014 with more than $1.1 million left over.

It made sense for two-year-old Ready for Hillary to change from a super PAC to hybrid PAC in May, said Seth Bringman, the group’s spokesman. 

That’s because the group in part wanted to give money directly to political candidates and party committees who did or might support Clinton.

It ultimately helped several dozen such groups, according to data compiled by the Center for Responsive Politics. It also spent millions of dollars promoting a still-undeclared Clinton candidacy through a variety of means — including more than $2 million on web advertisements alone.

“Becoming a hybrid PAC allowed us to broaden our set of tactics to achieve our goal” of supporting Clinton, Bringman said. “We wanted to use Citizens United in a completely unprecedented way.”

Despite its financial success, don’t expect Ready for Hillary to remain a hybrid PAC for long.

The group plans to disband and divest its assets when Clinton formally announces her presidential intentions.

Ready for Hillary will make some of those assets — supporter information and certain financial data, for example — available to Clinton’s presidential campaign, if there is one, Bringman said. Such a move would be legal, so long as Ready for Hillary doesn’t directly coordinate political efforts with a future Clinton campaign committee.

As for Ready for Hillary’s money and physical assets, will it give them to a pro-Clinton super PAC such as Priorities USA Action or American Bridge 21st Century, the latter run by prominent Clinton ally David Brock?

Perhaps a liberal “dark money” nonprofit group such as Patriot Majority USA, or American Bridge 21st Century’s sister nonprofit, the American Bridge 21st Century Foundation?

Bringman wouuldn’t say. “We will look at all the options available to make sure the work of all of our supporters of the past two years is used most effectively … and is not lost,” Bringman said.

As of Dec. 31, Ready for Hillary reported having more than $748,000. But it also must pay back a $1 million loan it took out on Oct. 6 from Amalgamated Bank in Washington, D.C. by Feb. 28. Going into 2015, it  still owed $741,000.

 

 

Campaign buttons are ready for distribution at an Iowa kickoff event in January 2014 for Ready for Hillary, a super PAC that in May converted itself into a hybrid PAC. Ready for Hillary is building a national network to benefit Hillary Clinton if she decides to seek the presidency in 2016. Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2015/02/01/16682/hybrid-pacs-generating-few-greenbacks

Millions of middle class Americans will remain uninsured despite Obamacare

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The good news from last week’s Congressional Budget Office report was that Obamacare will cost 20 percent less through 2019 than originally expected. That’s in  part because medical inflation has slowed more than the CBO anticipated back in 2010 when the law went into effect.

But the report had bad news too.  Fewer people are signing up for coverage than the government had hoped. In fact, the CBO estimates that 31 million of us will still be uninsured 10 years from now.

The Supreme Court bears some of the responsibility on that front.  It ruled in 2012 that even though Congress intended for all the states to expand their Medicaid programs to include more low-income individuals and families, states could opt out of that requirement. And many with Republican governors and legislatures did. .

The other main reason for the sobering estimate of uninsured 10 years down the road:  many people still can’t afford to buy health insurance, even with financial help from the government.

Back in 2010, the CBO predicted that 13 million people would have signed up for coverage by the end of this year through the Obamacare exchanges—which have been operating in every state and the District of Columbia since the fall of 2013.   The CBO revised its projection downward last week to 12 million, but the actual number very likely will be less than that. The Obama administration’s enrollment target for 2015 is just 9 million.

The CBO projects that health plan enrollment on the exchanges will jump to 21 million next year and that an additional 16 million previously uninsured Americans will be covered by either Medicaid or the Children’s Health Insurance Program by the end of 2016.

The vast majority of the people who have enrolled in exchange plans so far have had incomes so low they were eligible for federal subsidies to help them pay their premiums.

But millions of other people earn just a little too much to qualify for financial help from the government, and many of them are choosing to remain uninsured.

Although the Obama administration and Congressional Democrats who voted for the law don’t talk much about it, a significant percentage of the population will always be in a kind of no-man’s land. They earn too much to quality for either Medicaid or federal subsidies, but they also earn too little to be penalized for not buying it.

The law states that most people who remain uninsured have to pay a penalty, but many people are exempt from that provision for various reasons.

Probably the largest category of folks exempted from the penalty (which is 2 percent of household income in 2015, up to a maximum of $975) are those for whom the cost of the lowest priced policy available to them—even after their employer’s contribution or a federal subsidy—would still exceed more than 8 percent of their household income. Other so-called hardship exemptions are available for people who have filed for bankruptcy or been evicted in the past six months.

This means that the majority of the 31 million the CBO believes will still be uninsured 10 years from now will probably be middle-income folks —people who would like to be insured but just can’t make the numbers work.

About a third of those 31 million will likely be undocumented residents, but a lot of them might actually be in a better position to get coverage—and care—than many middle-class families who can’t find an affordable health plan. A bill introduced in the California General Assembly in December would create a separate, state-sponsored exchange for the millions of undocumented workers and their families in that state. Several California counties already fund clinics that provide free or low-cost care to the undocumented.

And now an increasing number of Republican governors are pursuing waivers from the federal government to expand Medicaid in their states, albeit with some shared-responsibility requirement. Indiana just became the 28th state to expand. Its plan, just approved by the feds, would require enrollees to contribute a few bucks to a health savings account every month. In Tennessee, the legislature will go into special session today to consider a similar plan from Gov. Bill Haslam. It, too, would  require many Medicaid enrollees to contribute something to the cost of their care. The federal government is weighing similar requests from Utah and Wyoming.

All that’s good. The more people with coverage, the better. But I haven’t seen any proposals from anyone yet to help the folks in the middle class who are falling through the cracks. 

Gov. Bill Haslam, left, speaks with lawmakers in Murfreesboro, Tenn., about his proposal to extend health coverage to 280,000 low-income Tennesseans. A special session to take up the matter is scheduled to begin on Monday, Feb. 2, 2015. Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2015/02/02/16681/millions-middle-class-americans-will-remain-uninsured-despite-obamacare

Obama budget includes $5M for FEC offices

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As far as addresses go, the Federal Election Commission's 999 E St. NW in Washington, D.C., is a pretty cool one — attached to a Hard Rock Cafe and across the way from the "X-Files'" favorite prop building, the FBI headquarters. It conjures visions of Herman Cain and Bruce Springsteen hanging out. 

But moving trucks could be in the FEC's future: After three decades operating there, the election agency's building lease will soon end, and President Barack Obama's new budget proposal includes $5 million for "lease expiration and replacement lease expenses."

It's the only significant cash infusion for the FEC in Obama's fiscal 2016 budget proposal, which Congress will assuredly slice up, add to or otherwise amend before returning it to him later this year for a signature.

Excluding the $5 million for lease-related expenses, Obama's fiscal 2016 budget calls for the agency to receive about $71.1 million— up from $67.5 million during the current fiscal year.

Most of the new money is slated to fund staff salaries, although the FEC's overall staffing level is projected to remain at fiscal 2015 levels — the equivalent of 345 full-time employees, according to the budget proposal. The FEC remains one of the federal government's smallest agencies. In contrast, most cabinet-level agencies employ tens of thousands of people.

The FEC, tasked with administering and enforcing the nation's election laws, earlier this decade endured several years of staffing reductions and budget cuts that, by many agency commissioners' own estimation, harmed its operations. 

In a message to supporters of his Organizing for Actionnonprofit, Obama today declared that budgets are the "truest measure of our priorities." 

He added: "As Vice President Biden likes to say, 'Don't tell me what you value. Show me your budget, and I'll tell you what you value.'" 

FEC officials, for their part, today confirmed that they don't yet know whether the agency will stay put or move elsewhere come 2017. FEC commissioners could not immediately be reached for comment.

The FEC moved to its current location from 1325 K St. NW in 1985.

The agency's hearing chamber on the 9th floor of 999 E St. NW has served as the forum for many of the nation's most notable campaign and election debates and decisions since Ronald Reagan occupied the White House.

No small measure of political theater has played out there, too, most notably when the commission approved comedian Stephen Colbert's request to operate a super PAC.

In a related matter, Obama's budget proposal, like his past several budget proposals, accounts for savings of at least $430,000 from the U.S. Senate switching to electronic filing of its campaign finance reports.

This line item appears, however, to be little more than wishful political thinking: the Senate again appears poised to continue filing its official campaign finance reports on paper, despite protests from some of the body's members.

The entrance to the Federal Election Commission's headquarters in Washington, D.C.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2015/02/02/16683/obama-budget-includes-5m-fec-offices

Obama administration budget proposes cuts for Medicare Advantage

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President Obama’s proposed 2016 budget takes a major swipe at waste and abuse in Medicare Advantage plans for the elderly, seeking more than $36 billion in cuts over the next decade to curb costly government overpayments to the industry.

The cuts are spelled out in the more than $1 trillion budget proposal to fund the giant Department of Health and Human Services. HHS includes the Centers for Medicare and Medicaid Services, which oversees the privately-run Medicare Advantage plans that now provide health insurance to more than 16 million seniors. 

The White House is focusing its budget scalpel on mounting concerns that some health plans exaggerate how sick their patients are to overcharge the government — the subject of a recent Center for Public Integrity investigation.

The White House budget, released on Monday, brought a quick retort from the Better Medicare Alliance, a group formed late in 2014 to advocate for Medicare Advantage plans.

“Medicare Advantage has been subject to billions in real cuts for each of the last four years. These annual cuts have resulted in higher out-of-pocket costs and lost benefits for seniors across America," the group’s interim executive director, Krista Drobac, wrote in a statement.

“Piling on billions more cuts will only do more harm to the 16 millions of seniors who count on Medicare Advantage for higher quality, more affordable health coverage,” wrote Drobac, a veteran health care lobbyist.

Unlike standard Medicare, in which doctors and hospitals bill for each service they provide, private Medicare Advantage plans and other managed care organizations are often paid a flat monthly rate for each patient using a formula called a “risk score” that estimates the health challenges facing individual patients.

Basically, Medicare pays higher rates for sicker patients and less for people judged to be in good health.

But federal officials concede that billions of tax dollars are misspent every year because some Medicare health plans exaggerate how sick their patients are, a practice known as “upcoding.”

At least six whistleblower lawsuits alleging that Medicare health plans inflated risk scores to overbill the government are pending in federal courts.

CMS officials have tried in the past to curb overpayments, but have run into stiff opposition from Congress. Many members note that the program is expanding rapidly and is popular with seniors in their district. As a result, many are loathe to support cuts.

The Center for Public Integrity’s “Medicare Advantage Money Grab” series, published in June, revealed that officials have struggled for years to prevent health plans from charging too much.

The series found that Medicare made nearly $70 billion in “improper” payments to health plans — mostly inflated fees from overstating patients’ health risks — from 2008 through 2013 alone. 

The Medicare Advantage program has grown rapidly under the risk-scoring formula, which Congress enacted in 2003. Officials expect Medicare Advantage to cost taxpayers as much as $160 billion this year, as enrollment tops 16 million, or about one in three elderly and disabled people on Medicare.

Fred Schultehttp://www.publicintegrity.org/authors/fred-schultehttp://www.publicintegrity.org/2015/02/03/16684/obama-administration-budget-proposes-cuts-medicare-advantage

Obama proposes to boost spending for nuclear armaments

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The Obama administration has proposed to boost spending on the U.S. stockpile of nuclear warheads at a higher rate than for many other military programs, according to White House budget documents published February 2.

In its proposal for fiscal 2016, the White House calls for spending $8.85 billion for maintaining and rebuilding the nation’s nuclear warheads, an increase of more than eight percent over current levels, the documents state.

The Pentagon, meanwhile, is requesting a 4 percent increase over its overall 2015 spending of $560.3 billion, to reach $585.2 billion in 2016; this total includes both the “base” budget and a large, associated military account meant to finance overseas “contingency operations.”

The spending on warheads represents just a small part of a sweeping U.S. effort to completely rebuild the United States “triad” of nuclear forces – including long-range bombers, subs and missiles -- over the next three decades. The Congressional Budget Office report last month estimated the cost of this ambitious project at $355 billion through 2023.

Frank Klotz, the head of the National Nuclear Security Administration (NNSA), the semi-autonomous agency that runs DOE’s nuclear programs, defended the spending Monday in a conference call with reporters, saying that the stockpile of U.S. nuclear warheads was the “smallest and oldest” that it has been since the Cold War and that the administration had a responsibility to refurbish them. “As long as we have this nuclear deterrent, it must remain effective,” he said.

The NNSA has shifted spending among some of its budget accounts since last year, making precise comparisons to earlier tallies difficult. But Klotz told reporters that besides the new spending for warheads, the current NNSA budget calls for a 3 percent increase in “core” nonproliferation programs, which are designed to reduce or eliminate nuclear materials and radiological threats.

NNSA deputy administrator for Defense Nuclear Nonproliferation Anne Harrington said the increase translated into about $40 million, but she declined to describe changes in nonproliferation spending in more detail.

According to the documents, the NNSA’s proposed $1.94 million nonproliferation budget includes $426.7 million for global efforts to secure nuclear materials, including weapons uranium and plutonium. It also seeks $345 million, or 18 percent of the total nonproliferation budget, for continued work on the mixed-oxide or MOX nuclear fuel plant under construction at the Savannah River Site in South Carolina, part of a joint-U.S. Russia effort to transform up to 34 tons each of their surplus weapons plutonium into reactor fuel.

A Department of Energy report last year concluded that the final cost of the overall U.S. MOX project would exceed $30 billion, considerably higher than initially expected. As a result, the White House last year sought a smaller appropriation – just $221 million -- to place the half-finished plant on “cold standby,” essentially mothballing it.

But a defense bill approved by Congress and signed by the president in December authorized a $345 million budget for the MOX project in fiscal 2015. Klotz told reporters the administration decided as a result to propose the same amount Congress had approved while it completes new Congressionally-mandated studies of potential MOX alternatives.

The Department of Defense’s overall $585 billion budget request, meanwhile, increases spending on several major modernization programs for nuclear weapons. The White House is asking for $1.25 billion for the strategic nuclear Long Range Strike Bomber project, up from $914 million this year.

The proposed budget would also increase spending for development of a replacement to aging Ohio class ballistic missile submarines by $116 million, to 1.4 billion this year. And it calls for spending $75.2 million on a program to modernize or replace the nation’s fleet of Minuteman III ICBMs, an increase of $68.3 million.

Arms control advocates call the ambitious program both bloated and wasteful, and based on an outdated view of the importance of nuclear weapons to U.S. security.

“It’s disappointing to see this administration has not put together a more cost effective, common sense approach” to modernizing the nuclear arsenal, said Daryl Kimball, executive director of the Arms Control Association in Washington.

Arms control expert Kenneth Luongo, a former Department of Energy official and president of the Partnership for Global security, said Russia’s withdrawal from cooperation on most other nuclear nonproliferation, which ended formally in December, has left some U.S. programs stranded.

“The real problem is that this administration has not created any new nonproliferation programs and the old ones are dying,” Luongo said. “And that’s a huge challenge that they have not faced up to.”

President Barack Obama visits the Supplemental Module Outfitting facility at Newport New Shipbuilding in Newport News, Va., in February of 2013. The facility supports the building of nuclear attack submarines.Douglas Birchhttp://www.publicintegrity.org/authors/douglas-birchhttp://www.publicintegrity.org/2015/02/03/16686/obama-proposes-boost-spending-nuclear-armaments

Hear how politics beat science on chemical research

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As the Center and Reveal reported recently, assessments of potentially dangerous chemicals by the Environmental Protection Agency are at a standstill.

Our reporter David Heath sat down with Reveal, a new public radio show from The Center for Investigative Reporting and PRX, to talk about where this impasse comes from, and how the Obama administration has fallen short on the issue. 

Al Letson: When you think of hot button political issues scientific integrity probably doesn't make your list, but it was a priority for Barack Obama. During his first presidential campaign Obama promised he wouldn't let politics interfere with science. He repeated that pledge when he became president.

Pres. Obama: Let's be clear, promoting science isn't just about providing resources it's also about protecting free and open inquiry, it's about letting scientists do their jobs free from manipulation or coercion and listening to what they tell us, even when it's inconvenient, especially when it's inconvenient.

Al Letson: When Obama took office there was already a big problem at the Environmental Protection Agency. One of the EPA's jobs is to determine which chemicals can make us sick, then it has to decide what needs to be done to protect the public from those chemicals. That can mean new regulations, but regulations can eat into the profits of chemical companies. Those companies have a financial interests in stopping them. That's where politics come into play. The Obama administration had big plans to get politics out of the process, but like a lot of good intentions, you know where they lead. Here's David Heath with the Center for Public Integrity to tell us what happened. David.

David Heath: Hi Al.

Al Letson: Hey man, walk me through this.

David Heath: To understand what happened you have to understand how the EPA decides which chemicals can make us sick. To do that the EPA scientists start by reviewing the science, then comes the hard part, they actually have to calculate how much of a toxic chemical we can be exposed to before it gives us cancer.

Al Letson: How did they do that?

David Heath: It's actually not very easy because you can't just give somebody a toxic chemical and see if it makes them sick. The EPA scientists have to rely on things like animal studies or studies of people who are exposed to very high levels of a toxin, such as factory workers.

Al Letson: That sounds tricky if you can only use, test animals and people that have been exposed to high levels of this stuff.

David Heath: That's right, and the chemical industry uses that fact to create doubt, and that's a strategy that was actually pioneered by the tobacco industry, that is to argue that because there's uncertainty in the science the products are in fact safe. During the Bush administration the industry actually had support for this in the White House. Congressional investigators found that the Bush White House put many of the EPA scientific findings on hold. In fact investigators said the delays were so endless that the scientific research being done at the EPA was virtually obsolete. Things would go over to the Bush administration and they'd ask a bunch of questions and they'd have to go back and start all over again.

Al Letson: Let me get this straight, during the Bush administration the EPA would send reports to the White House, the White House would then look at these reports and as a delay tactic ask questions that then made the EPA go back and restart the whole process over again.

David Heath: Right.

Al Letson: Obama comes into power and what changes?

David Heath: Obama knew of these and the Obama administration came in with a plan to fix it, and that called basically for doing many more chemicals assessments, and they do them a lot faster, but that plan has actually failed. In the last three years the EPA has actually done fewer chemical assessments than ever before.

Al Letson: Now why is that? If Obama comes in with the idea of moving this forward, how is it that we've done less?

David Heath: It all comes down to tactics by the chemical industry, before they can rely on the White House to block these assessments but then when Obama took office they really had to turn to Republicans in congress, of course until the last election Republicans didn't have control of congress so they couldn't pass legislation. But there were other ways that these Republicans could exert control of the EPA. Let me give you an example of that. David Vitter, a senator from Louisiana delayed a formaldehyde assessment by threatening to block a key EPA appointment. That assessment had been on the works since 1998 and it's still not out.

Al Letson: Since 1998 scientists have been working on assessing formaldehyde, which is a chemical that is pretty common?

David Heath: Formaldehyde is in your kitchen cabinets, it's in some of your shirts, it's everywhere, and the EPA had found that it's linked to leukemia. It's a pretty serious finding. But these results have never been published. The same thing happened with arsenic's. In 2011 the EPA had been working on an arsenic assessment, by then for eight years, but congressman Mike Simpson of Idaho put language in a report attached to a spending bill that actually delayed that assessment, and the EPA was just about to say that arsenic was far more deadly than they had previously thought, it cause cancer at a higher rate than anybody thought.

Al Letson: One of my questions here is I think that the vast majority of the American public believes that arsenic is a bad chemical and therefore not in a lot of the everyday stuff we use, that the EPA has already done its job and said that arsenic is deadly, and that's just common knowledge, like I figured that the EPA had already stated that. What do they find out about arsenic that made the chemical industry so worried?

David Heath: The EPA scientists were actually going to say that arsenic was 17 times more potent as a carcinogen than they previously thought. What that meant was that even people drinking the legal limit of arsenic in drinking water were likely to get cancer from it. In fact they came up with a calculation that was 730 out of 100,000 people will get cancer from it. Here's what Congressman Simpson said when I asked him how he did it.

Cong. Simpson: We’ve asked for the National Academy of Sciences to review the EPA's science and how they come up with their decisions.

Al Letson: That seems like a perfectly reasonable request. After all the Academy is the nation's premier scientific adviser, right?

David Heath: That's true, but the Academy can also be used to create delays. I asked William Ruckelshaus about this, he ran the EPA under both presidents Nixon and Reagan.

William Ruckelshaus: Anytime that the EPA or any other agencies that has regulatory authority over these kinds of chemicals find something wrong it ought to be immediately published to the extent that that's delayed or stalled in some way is really incontestable, particularly if it's done on behalf of the industry that manufactures the chemical and has economic benefit associated with it. 

David Heath: He said that these delays can actually cost lives.

William Ruckelshaus: The longer you delay it the more roadblocks can be thrown into its control, the higher the risk for the public that something terrible will happen.

Al Letson: The EPA's work on arsenic and Formaldehyde is on hold but what about other chemicals?

David Heath: Actually all chemical assessments right now have been delayed. Congressman Simpson acted on behalf of two pesticide companies who make a weed killer containing arsenic. Those companies hired a lobbyist named Charlie Grizzle, who had been a former EPA official and knew the ropes. At the same time he was also working as a lobbyist for the Formaldehyde industry, and at the same time he was lobbying against the arsenic assessment. He was lobbying to delay all chemical assessments, about 50 in all. I asked Grizzle about that. Were you behind that Formaldehyde language and the committee report?

Charlie Grizzle: We, in the interests of full disclosure we formally represented the Formaldehyde Council and now represent [inaudible 00:32:18] chemicals.

Al Letson: Wait, wait, wait. Obama's EPA is taking orders from chemical industry lobbyist?

David Heath: Effectively they are, yes. This language didn't even appear in the bill, it appeared in a committee report attached to a bill. It's not legally binding. I showed this language to Charles Fox, he's a former EPA official who worked under the Clinton administration.

Charles Fox: This is what we consider advisory language. The agency is not obligated to implement that language in the report but it is, for lack of better word, strongly encouraged to do so and the agency knows that this language is coming from their appropriations committee so it is certainly something they will pay attention to.

David Heath: The EPA could have chosen to ignore this?

Charles Fox: Absolutely.

Al Letson: Why didn't the EPA ignore it?

David Heath: That's a really good question. I asked Dr. Kenneth Olden that very thing, he's the person who oversees the office that does these assessments. He took over that job about two years ago and he's won a lot of support from House Republicans and the chemical industry. In fact this year despite congress cutting $60 million from the EPA budget they actually explicitly said that they weren't going to cut any money from Olden's office. I asked Olden why the EPA didn't ignored this language and he said it wasn't his decision.

Dr. Olden: It more or less dealt with a policy issue in the regulatory arena that we don't in fact deal with. That's my position.

David Heath: You're saying that those decisions are actually made in a higher level, didn't you?

Dr. Olden: David, I stick with my answer.

David Heath: Also, I asked Olden when the EPA was going to complete more of these assessments.

Dr. Olden: It takes more than one year to see a final product, in other words an assessment. If you're building airplanes and it takes 10 years you can't expect to see finished products in three years. We are doing as much as humanly possible and I think the agency is pleased and the scientific community is pleased. I feel good about what we've done.

David Heath: Since Olden came to the EPA in 2012 his office has actually only completed four chemical assessments.

Al Letson: Only four chemical assessments since 2012, what's the EPA been doing?

David Heath: They've really gotten away from the plan that they had put out to do more of these assessments and they really have focused on fulfilling the wishes of the House Republicans.

Al Letson: Specifically what does that entail?

David Heath: One part of it is that they're holding more public meetings. When they do these chemical assessments now they have a meeting so that people can have input into what they're doing.

Al Letson: That sounds good, right? That gives the average Joe a chance to listen in and see exactly how all this is working, correct?

David Heath: True, it sounds good. What's happened is that the industry pays scientists to go to these meetings and these meetings end up being dominated by industry scientists. The EPA has actually acknowledged this and has come out with a plan to try to bring in more independent voices into these meetings. But I attended one of these public sessions just two weeks after they announced these reforms and every single scientists who made a presentation at that hearing was an industry scientist.

Deborah Proctor: I'm Deborah Proctor, I work for ToxStrategies and my attendance today here has been supported by EPRI, which is Electric Power Research Institute.

John Hays: John Hays, I'm from Summit Toxicology and my work here has been supported by the American Chemistry Council.

Chris Kirman: Chris Kirman from Summit Toxicology through American Chemistry Council.

Mark Harris: I'm Mark Harris with ToxStrategies supported by ACC.

Nancy Beck: This is Nancy Beck from the American Chemistry Council.

David Heath: To give you a sense of what happens at these meetings here's some exchange between Nancy Beck, now she's a scientist with the American Chemistry Council, which is the chemical industry's chief trade association, and a woman, a scientist at the EPA named Catherine Gibbons.

Nancy Beck: I think for these open meetings it'd be really helpful to have these type of information not see it the first time in the draft.

David Heath: If you listen closely you'll hear that Beck is actually asking for more delays.

Nancy Beck: ... scientific issues that would be incredibly helpful.

Catherine Gibbons: But I think it's an extremely a laborious process.

Nancy Beck: Right.

Catherine Gibbons: We get a lot of information -­‐

Al Letson: David you spend a couple of years looking into all of these stuff, I'm curious why do you think this is so important? What is it about this story that really grabs you?

David Heath: It's a big issue, after all we're all exposed to toxic chemicals so if the government is not doing anything we can get sick from it, we can get cancer from it, and we don't really know exactly how many of these chemicals can possibly make us sick. That is something that has to be decided by scientists doing the research and that's just not happening right now. What's really interesting to me about it is that President Obama made this a top priority and it seems so easily achievable, he didn't have to get approval from congress to do it. It was really just tweaking the inner workings of a bureaucracy. It seems like a no brainer and yet the administration is just not been able to accomplish this. I guess that they just found that the politics were just so overwhelming.

Al Letson: David Heath from the Center for Public Integrity. Thanks a lot for coming in and talking to us today.

David Heath: Thank you.

David Heathhttp://www.publicintegrity.org/authors/david-heathhttp://www.publicintegrity.org/2015/02/03/16687/hear-how-politics-beat-science-chemical-research

Time Warner made its case to legislators at luxury resort

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Fed up with slow internet speeds offered by commercial services, some Maine cities and towns are turning to a new way to get high-speed broadband for their residents and businesses: doing it themselves.

Maine ranks near the bottom of all 50 states in internet speeds, which frustrates consumers and also puts a damper on business.

Legislators have submitted multiple bills this session to help municipalities build  high-speed broadband networks. One bill’s title gives the flavor of many of them: “An Act To Actually Expand Rural Broadband.”

All that activity poses a threat to the state’s largest internet provider, Time Warner Cable. The more people who use a municipally-sponsored broadband service, the fewer customers available to the company.

Just as the legislative session was starting in January, Time Warner went on the offensive. It invited Maine lawmakers to an overnight “Winter Policy Conference” at a Cape Elizabeth resort, where the company tried to persuade legislators that government owned-broadband was a bad idea. The guests were served steak dinners and some were put up for the night in rooms that retail between $205 to $355 per night.

While lawmakers say they attended the event to become informed, others are not sure that legislators attending such an “educational forum,” as Time Warner called it, is in the public interest. Especially one at a resort described by its owners as designed to “surround you with every creature comfort.”

“If we want good public policy, there’s reason for all of us to be worried,” said utilities expert Gordon Weil, the state’s first Public Advocate, who represented the interests of ratepayers before regulators. Such treatment of legislators is “obviously intended to persuade them by more than the validity of the arguments; it’s intended to persuade by the reception they’re given.”

And the Time Warner event is not the only one of its type. Legislators are often invited to parties, dinners and multi-day tours paid for by interest groups.

“I think this idea of meals and conversations is how Augusta functions on some level, it’s where the lobby gets to function on some level,” said Rep. Mark Dion, D-Portland, who attended the event, did not stay overnight but was provided dinner and breakfast by Time Warner.

The event began the evening of Jan. 22. Representatives from Pets for Vets, a charity supported by Time Warner, gave the evening keynote presentation.

After breakfast the next day, legislators attended sessions that presented the telecommunications world as seen through the eyes of Time Warner, as well as a session featuring a panel of legislative leaders.

“It was helpful to go and get a perspective on some of those issues,” said Rep. Ellie Espling, R-New Gloucester, for whom Time Warner paid the cost of meals and the overnight stay. “I’m always looking at the opportunity to learn more about different things.”

How many legislators attended the conference isn’t clear.

An email from Melinda Poore, Time Warner’s chief Maine lobbyist and the event’s organizer, sent to members of the legislative leadership panel prior to the event, said “we … have maxed out the attendance.” Sen. Andre Cushing, a Republican senator from Hampden, for whom Time Warner also paid the cost of meals and the room, said he thought “about a dozen” legislators attended the Thursday night dinner. Rep. Dion said “30 or 35” attended Friday’s sessions.

What’s also not clear is whether or how many legislators brought partners or spouses to the event. Poore’s lobbying disclosure for Jan. 2013 shows that at a previous Time Warner policy conference in 2013, several lawmakers brought partners or spouses. 

Poore did not respond to a request for details about the recent event. Instead, Scott Pryzwansky, Time Warner Cable’s director of public relations for the eastern U.S., responded by email, declining to answer any specific questions:

“As one of Maine’s leading employers and telecommunications companies, we designed this second biannual educational forum to help policymakers and others better understand some of the complex telecommunications issues confronting Maine and the nation.

“Like many other organizations in Maine that sponsor similar forums, we believe it is our responsibility to help raise awareness about issues that are central to Maine’s economy and future.”

The Center obtained copies of materials distributed at the event from both Cushing and Rep. Barry Hobbins, D-Saco, who also attended. Hobbins’ meals and lodging were covered by Time Warner.

While there were five sessions, Espling said “broadband was probably the biggest theme.” In addition to a specific session entitled “Broadband in Maine,” attendees were given a presentation by pollster Mary Anne Fitzgerald on a Time Warner-commissioned survey about, among other subjects, public attitudes towards broadband expansion.

That presentation concerned state representative Sara Gideon, D-Freeport, who only attended Friday’s sessions.

The answers in the poll’s broadband section made it appear that a majority of the state’s taxpayers do not want to use public funds to support broadband expansion or to “subsidize public entities to compete with private businesses.” But Gideon said such results were responses to “leading” questions.

“We see lots of surveys as policymakers and we have to be smart enough to look at what questions are asked,” said Gideon.

Gideon was bothered by survey questions such as, “Should taxpayer-supported debt be used to build government-owned and operated broadband networks that sell broadband services to the public…where no broadband service currently exists…(or) broadband services are already available?”

“Nobody’s going to say ‘Yes, I want my state to incur debt,’” said Gideon.

Two New York Law School scholars also spoke to the legislators. They presented a report that asserted that, contrary to what the legislators might think, the speed of broadband available through private companies was getting faster and that government-operated networks were neither necessary nor a good public investment.

The Cape Elizabeth event for legislators fits into a larger effort by Time Warner nationally to oppose public broadband growth.

A 2014 news story, “How big telecom smothers city-run broadband,” by the Center for Public Integrity, a nonprofit journalism organization, reported: “For more than a decade, AT&T, Comcast, Time Warner Cable Inc., and CenturyLink Inc. have spent millions of dollars to lobby state legislatures, influence state elections and buy research to try to stop the spread of public Internet services that often offer faster speeds at cheaper rates.”

Since 2008, Time Warner has donated more than $240,000 to Maine politicians: $127,360 to Democrats and Democratic PACs, and $113,250 to Republicans and Republican PACs.

Gideon plans to introduce legislation this session, co-sponsored by Sen. Garrett Mason, R-Lisbon Falls, to fund a planning process for communities that are considering building connections to high-speed broadband.

Freshman Rep. Norman Higgins, R-Dover-Foxcroft, has introduced legislation that would help rural communities connect to faster broadband service. His bill would foster “public-private partnerships” to get the job done.

Despite his interest in the topic, Higgins said he chose not to attend the event out of concern how it would appear to constituents.

“I’m a new legislator and I’m trying to be very diligent about making sure that I provide an appropriate distance to meet my comfort level,” said Higgins. He said his service on the Energy, Utilities and Technology Committee made him especially sensitive about appearing to take favors, because it’s “the committee that Time Warner comes before on any issues that relate to their core business.”

“That was my personal decision, not a reflection on anybody else,” said Higgins.

Rep. Dion, who is the co-chair of the committee, said attending the Time Warner event was “an education,” as long as he remembered “this kind of stakeholder-sponsored education seminars is very helpful if you understand that really it’s presupposing a position from that stakeholder. They don’t normally invite people who are critical of their positions.”

Weil, the former state public advocate, said that it’s a mistake to assume that other interests in the broadband issue have an equal ability to get their message across.

“The municipalities do not have corresponding resources,” said Weil.

Yet corporations like Time Warner have the right to make their case to lawmakers, said Weil.

“I would have said, ‘Fine, if you want to meet with me come meet on state facilities, no steak dinner.’

“If steak dinners didn’t work, they wouldn’t give them steak dinners,” said Weil.

The Maine Center for Public Interest Reporting is a nonpartisan, non-profit news service based in Augusta. Email: pinetreewatchdog@gmail.com.

The Inn by the Sea in Cape Elizabeth, Maine.Naomi Schalithttp://www.publicintegrity.org/authors/naomi-schalitBlake Davishttp://www.publicintegrity.org/authors/blake-davishttp://www.publicintegrity.org/2015/02/04/16691/time-warner-made-its-case-legislators-luxury-resort

Time Warner Cable made its case to legislators at luxury resort

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Fed up with slow internet speeds offered by commercial services, some Maine cities and towns are turning to a new way to get high-speed broadband for their residents and businesses: doing it themselves.

Maine ranks near the bottom of all 50 states in internet speeds, which frustrates consumers and also puts a damper on business.

Legislators have submitted multiple bills this session to help municipalities build  high-speed broadband networks. One bill’s title gives the flavor of many of them: “An Act To Actually Expand Rural Broadband.”

All that activity poses a threat to the state’s largest internet provider, Time Warner Cable. The more people who use a municipally-sponsored broadband service, the fewer customers available to the company.

Just as the legislative session was starting in January, Time Warner went on the offensive. It invited Maine lawmakers to an overnight “Winter Policy Conference” at a Cape Elizabeth resort, where the company tried to persuade legislators that government owned-broadband was a bad idea. The guests were served steak dinners and some were put up for the night in rooms that retail between $205 to $355 per night.

While lawmakers say they attended the event to become informed, others are not sure that legislators attending such an “educational forum,” as Time Warner called it, is in the public interest. Especially one at a resort described by its owners as designed to “surround you with every creature comfort.”

“If we want good public policy, there’s reason for all of us to be worried,” said utilities expert Gordon Weil, the state’s first Public Advocate, who represented the interests of ratepayers before regulators. Such treatment of legislators is “obviously intended to persuade them by more than the validity of the arguments; it’s intended to persuade by the reception they’re given.”

And the Time Warner event is not the only one of its type. Legislators are often invited to parties, dinners and multi-day tours paid for by interest groups.

“I think this idea of meals and conversations is how Augusta functions on some level, it’s where the lobby gets to function on some level,” said Rep. Mark Dion, D-Portland, who attended the event, did not stay overnight but was provided dinner and breakfast by Time Warner.

The event began the evening of Jan. 22. Representatives from Pets for Vets, a charity supported by Time Warner, gave the evening keynote presentation.

After breakfast the next day, legislators attended sessions that presented the telecommunications world as seen through the eyes of Time Warner, as well as a session featuring a panel of legislative leaders.

“It was helpful to go and get a perspective on some of those issues,” said Rep. Ellie Espling, R-New Gloucester, for whom Time Warner paid the cost of meals and the overnight stay. “I’m always looking at the opportunity to learn more about different things.”

How many legislators attended the conference isn’t clear.

An email from Melinda Poore, Time Warner’s chief Maine lobbyist and the event’s organizer, sent to members of the legislative leadership panel prior to the event, said “we … have maxed out the attendance.” Sen. Andre Cushing, a Republican senator from Hampden, for whom Time Warner also paid the cost of meals and the room, said he thought “about a dozen” legislators attended the Thursday night dinner. Rep. Dion said “30 or 35” attended Friday’s sessions.

What’s also not clear is whether or how many legislators brought partners or spouses to the event. Poore’s lobbying disclosure for Jan. 2013 shows that at a previous Time Warner policy conference in 2013, several lawmakers brought partners or spouses. 

Poore did not respond to a request for details about the recent event. Instead, Scott Pryzwansky, Time Warner Cable’s director of public relations for the eastern U.S., responded by email, declining to answer any specific questions:

“As one of Maine’s leading employers and telecommunications companies, we designed this second biannual educational forum to help policymakers and others better understand some of the complex telecommunications issues confronting Maine and the nation.

“Like many other organizations in Maine that sponsor similar forums, we believe it is our responsibility to help raise awareness about issues that are central to Maine’s economy and future.”

The Center obtained copies of materials distributed at the event from both Cushing and Rep. Barry Hobbins, D-Saco, who also attended. Hobbins’ meals and lodging were covered by Time Warner.

While there were five sessions, Espling said “broadband was probably the biggest theme.” In addition to a specific session entitled “Broadband in Maine,” attendees were given a presentation by pollster Mary Anne Fitzgerald on a Time Warner-commissioned survey about, among other subjects, public attitudes towards broadband expansion.

That presentation concerned state representative Sara Gideon, D-Freeport, who only attended Friday’s sessions.

The answers in the poll’s broadband section made it appear that a majority of the state’s taxpayers do not want to use public funds to support broadband expansion or to “subsidize public entities to compete with private businesses.” But Gideon said such results were responses to “leading” questions.

“We see lots of surveys as policymakers and we have to be smart enough to look at what questions are asked,” said Gideon.

Gideon was bothered by survey questions such as, “Should taxpayer-supported debt be used to build government-owned and operated broadband networks that sell broadband services to the public…where no broadband service currently exists…(or) broadband services are already available?”

“Nobody’s going to say ‘Yes, I want my state to incur debt,’” said Gideon.

Two New York Law School scholars also spoke to the legislators. They presented a report that asserted that, contrary to what the legislators might think, the speed of broadband available through private companies was getting faster and that government-operated networks were neither necessary nor a good public investment.

The Cape Elizabeth event for legislators fits into a larger effort by Time Warner nationally to oppose public broadband growth.

A 2014 news story, “How big telecom smothers city-run broadband,” by the Center for Public Integrity, a nonprofit journalism organization, reported: “For more than a decade, AT&T, Comcast, Time Warner Cable Inc., and CenturyLink Inc. have spent millions of dollars to lobby state legislatures, influence state elections and buy research to try to stop the spread of public Internet services that often offer faster speeds at cheaper rates.”

Since 2008, Time Warner has donated more than $240,000 to Maine politicians: $127,360 to Democrats and Democratic PACs, and $113,250 to Republicans and Republican PACs.

Gideon plans to introduce legislation this session, co-sponsored by Sen. Garrett Mason, R-Lisbon Falls, to fund a planning process for communities that are considering building connections to high-speed broadband.

Freshman Rep. Norman Higgins, R-Dover-Foxcroft, has introduced legislation that would help rural communities connect to faster broadband service. His bill would foster “public-private partnerships” to get the job done.

Despite his interest in the topic, Higgins said he chose not to attend the event out of concern how it would appear to constituents.

“I’m a new legislator and I’m trying to be very diligent about making sure that I provide an appropriate distance to meet my comfort level,” said Higgins. He said his service on the Energy, Utilities and Technology Committee made him especially sensitive about appearing to take favors, because it’s “the committee that Time Warner comes before on any issues that relate to their core business.”

“That was my personal decision, not a reflection on anybody else,” said Higgins.

Rep. Dion, who is the co-chair of the committee, said attending the Time Warner event was “an education,” as long as he remembered “this kind of stakeholder-sponsored education seminars is very helpful if you understand that really it’s presupposing a position from that stakeholder. They don’t normally invite people who are critical of their positions.”

Weil, the former state public advocate, said that it’s a mistake to assume that other interests in the broadband issue have an equal ability to get their message across.

“The municipalities do not have corresponding resources,” said Weil.

Yet corporations like Time Warner have the right to make their case to lawmakers, said Weil.

“I would have said, ‘Fine, if you want to meet with me come meet on state facilities, no steak dinner.’

“If steak dinners didn’t work, they wouldn’t give them steak dinners,” said Weil.

The Maine Center for Public Interest Reporting is a nonpartisan, non-profit news service based in Augusta. Email: pinetreewatchdog@gmail.com.

The Inn by the Sea in Cape Elizabeth, Maine.Naomi Schalithttp://www.publicintegrity.org/authors/naomi-schalitBlake Davishttp://www.publicintegrity.org/authors/blake-davishttp://www.publicintegrity.org/2015/02/04/16691/time-warner-cable-made-its-case-legislators-luxury-resort

Capitalizing on a political contribution cap hike

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A pair of wealthy campaign contributors — including one who’s dead — wasted no time exercising their newfound right to pump political parties with significantly more cash than they could before December.

Public Storage founder B. Wayne Hughes Sr. gave the Republican National Committee $67,600 on Dec. 30, which the RNC labeled as a “convention fund contribution,” according to new federal campaign finance disclosures.

The Democratic Congressional Campaign Committee, meanwhile, reported receiving $38,392.06 on Dec. 31 from what appears to be a trust for the estate of Robert Bohna, a Sonoma, California, businessman who died five years ago. That contribution is labeled in a federal filing as a “building fund contribution.”

Campaign finance changes passed by Congress in mid-December and subsequently signed into law by President Barack Obama allow national political party committees to collect money designated for separate presidential convention, building and recount funds. The law builds on a Federal Election Commission ruling from October, which gave political parties greater ability to raise funds for their quadrennial political conventions.

The practical effect for wealthy donors: It greatly increases the total amount of money they may give to party committees, from less than $100,000 a year to $777,600 per year.

Political parties “don’t miss a beat,” said Larry Noble, a former general counsel of the Federal Election Commission who is now a lawyer with the Campaign Legal Center, referring to the parties. “They’re relentless ... usually, the day after the election they start fundraising for the next election, so it’s not surprising that the day after the bill went into effect they started raising money for it.”

Josh Schwerin, a spokesman for the DCCC, said the Bohna contribution is the only one the DCCC has accepted under the new rules so far.

The RNC did not respond to a request for comment about the contribution from Hughes. But the new law, passed Dec. 11, allowed parties to create such convention funds.

Parties had recount funds before the law passed, but the new law allows donors to give more. The National Republican Congressional Committee reported receiving contributions for a recount fund both before and after the legislation passed Congress, making it difficult to tell which contributions are attributable to the new law.

The NRCC declined comment. Among the contributions to the recount fund it reported receiving after the new law passed: $15,000 from Koch Industries PAC on Dec. 23.

The FEC has not yet created rules directing parties how to report the contributions to the new funds, nor is there a timetable for the agency to issue the guidelines. This could make for confusing reporting — both for the party committees and people reading the committees’ reports.

The parties “are probably identifying these things on their own … because they want to avoid getting letters from the FEC saying they have exceeded contribution limits. A lot of this stuff is automated,” said Jan Baran, co-chairman of the election law and government ethics practice at Wiley Rein.

In a related matter, the FEC this week did release a routine increase to contribution caps to compensate for inflation.

Under the new limits, individuals can give candidates up to $2,700 for the primary and $2,700 for the general election, an increase from $2,600, and up to $33,400 per year to national party committees, compared to $32,400 per year.

The FEC also increased the threshold amount lobbyists can raise for a political committee before their names must be disclosed, to $17,600 from $17,300.

Carrie Levinehttp://www.publicintegrity.org/authors/carrie-levinehttp://www.publicintegrity.org/2015/02/04/16711/capitalizing-political-contribution-cap-hike

Big business crushed ballot measures in 2014

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Anthem Inc. quickly mounted its defenses when consumer advocates pushed for a 2014 ballot initiative in California that would have made it more difficult for the nation’s third largest health insurer to raise rates.

The company, based in Indianapolis, Ind., shelled out $12.8 million to back television ads and a website that warned voters the measure would “give one politician too much power,” “create more bureaucracy” and “interfere with your treatment options.”

Anthem’s money, combined with millions from other interested parties, swamped efforts by Consumer Watchdog, the advocacy group that spent four months gathering the signatures to put Proposition 45 on the ballot. Opponents of the bill together gave more than $31.5 million — dwarfing supporters’ $2.6 million.

In November, Anthem and the other big business interests won at the polls, with nearly 59 percent of the vote. 

Anthem, formerly known as WellPoint, was the second-biggest donor to groups fighting over ballot measures in the nation last year, according to a Center for Public Integrity analysis. The donors gave the money to political committees that advocated for or against the propositions. The health insurer did not respond to requests for comment.

Anthem’s victory on Proposition 45 was part of a pattern that played out across the country: Business interests poured money into ballot question fights, largely to protect their own revenue, with overwhelmingly positive results.

More than three-quarters of the $272 million given by the top 50 donors to ballot measure groups nationwide came from corporations or business trade groups, according to the analysis. They gave most of their money to defeat proposals and were almost always successful, winning 96 percent of the time.

“There’s no question that when business or corporations or entities that are affected by ballot initiatives give to the ballot initiative process, they're not doing so out of altruism," said Joe Tuman, a professor of political and legal communications at San Francisco State University. "They’re doing so out of rational self-interest." 

‘Spending matters’

The Center for Public Integrity collected campaign finance records filed by statewide ballot measure groups that ran ads on local broadcast, national broadcast and national cable television networks in 2014. The Center then analyzed the donations behind the groups to create the list of the top 50 contributors to ballot measure fights around the country. [More details on the methodology]. 

Together, those 50 mega-donors gave $272 million, nearly two-thirds of the $429 million contributed to those ballot measure campaigns in 2014.

That means that a few powerful entities dominated debates nationwide over ballot initiatives, which were originally intended to give citizens a stronger voice in government.

Most of the top donors gave to more than one ballot fight — and almost half of them helped fund battles in multiple states. A few were also generous in other 2014 elections, as well. Five of the top 50 ballot measure contributors were also among the top 50 donors to races for state-level candidates.

Some of the money paid for mailers and robo-calls, but much of it went to TV ad blitzes. In 2014, more than $190 million was spent on ballot measure ads alone.

Multinational oil companies BPConocoPhillips and Exxon Mobil Corp. successfully beat back a measure in Alaska that would have repealed tax breaks for the oil companies. After giving more than $3.5 million each to the “no” side, they won with nearly 53 percent of the vote. 

The American Beverage Association, a trade group based in Washington, D.C., that represents beverage producers, gave more than $8.2 million to fight a Massachusetts measure that would have expanded the deposit that customers must pay when buying bottled drinks. It, too, got what it wanted when 71 percent of voters rejected the new deposit proposal.

But 2014 also proved that money only goes so far, said John Matsusaka, a professor and executive director of the Initiative and Referendum Institute at the University of Southern California.

“Spending matters. If you spend money, you are going to get some votes,” he said. But “if it’s an unpopular measure you can spend as much as you like and it’s not going to pass. It’s not a system where you can just walk in and buy laws.”

Mile High USA Inc., a subsidiary of the Rhode Island-based Twin River Casino company that owns a racetrack and off-track betting parlor in Colorado, gave more than any other ballot measure donor in the U.S. in an unsuccessful effort to expand gaming at its Arapahoe Park racetrack near Aurora, Colorado

Mile High gave $19.8 million to a “yes” campaign, which worked out to $9.84 per ballot cast in Colorado. Mile High’s corporate clout was countered not by citizens, but by a group of competing casinos in the state that together gave nearly $16.3 million to defeat the measure. Mile High promised that much of the newfound gambling revenue would go to a state education fund: “By permitting limited gaming at Arapahoe Park, 68 will provide millions to our schools each year,” said one backer in an ad. But voters were not swayed: 70 percent of them voted against the amendment.

In another expensive, uphill fight, Wal-Mart gave $9.3 million to an effort to pass a measure in North Dakota that would have let the company open pharmacies in the state, a haven for small, pharmacist-owned drug stores. Wal-Mart also lost, though its opponents raised a fraction of what the big-box retailer gave.

Giving big on defense

Within the top 50 donors, business interests fighting to defeat ballot measures were more successful in 2014 than those whose money was directed at trying to pass initiatives. Companies such as MGM Resorts International and Monsanto gave heavily to fight proposals that would have hurt their profits. 

MGM, which is building an $800 million casino in Springfield, Massachusetts, helped pay for TV ads that warned voters the state would lose thousands of jobs if it nixed its gambling law in a November ballot question. “If Question 3 passes, we’ll lose it all — as simple as that,” said a man dressed as a construction worker in one ad. “We’re asking people to vote no on 3 so we can keep the jobs.”

For MGM, the investment of nearly $5.4 million to fight Question 3 paid off — voters rejected the initiative.

That fits with what political experts know about ballot measures: They’re easier to defeat than to pass.

“It’s easier to defend the status quo, often,” said Daniel Smith, a University of Florida professor who has studied ballot measures for two decades. “The onus is on the proponents to articulate why a measure needs to be passed by the people. People know what the status quo is, and you can raise doubts about whether you’re going to be better off under this proposed change.”

Some companies made successful “no” arguments across more than one state. Agricultural giant Monsanto gave $10.7 million to fight ballot questions in Colorado and Oregon that would have required genetically modified foods to be specially labeled. The company is the largest producer of genetically modified seeds in the world. 

“We fully support the idea of providing information to consumers to help them make choices about foods as long as the information [on the labels] being provided to consumers is accurate, science based and does not mislead,” said Monsanto spokeswoman Charla Lord in an email. “What we are not supportive of is a state-by-state patchwork of labeling laws.”

Supporters of labeling, many of them natural food companies, raised nearly $1 million in Colorado and nearly $6.5 million in Oregon, but it wasn’t enough. Monsanto and its food-industry allies raised more than $16 million in Colorado and $20 million in Oregon, winning the ballot contests with 65 percent and just over 50 percent of the vote, respectively.

Giving money to ballot measure fights has become the norm for companies seeking to defend their profits, said Justine Sarver, executive director of the progressive Ballot Initiative Strategy Center.

“Ballot measures were originally created as a check on corporate influence in state legislatures,” Sarver said. “Today, corporations use the process to pad their bottom line.”

And business groups are continuing to fight for their profits at the polls. For example, plastics companies in California are already gearing up for a referendum battle over the state’s ban on single-use plastic bags.

The companies have already given millions to back a referendum repealing the ban, delaying its implementation and allowing the companies to continue raking in profits until the vote.

Billionaires and ballot questions

In addition to corporate giants, several wealthy individuals, including former New York Mayor Michael Bloomberg, used their vast stores of cash in an effort to influence state and local laws. Their new prominence in the ballot measure scene has surprised experts.

“That’s become a big issue now,” Matsusaka said. “It seems like there’s a lot of them these days.”

Bloomberg and Texas billionaire John Arnold each gave more than $2 million to groups supporting electoral reform in Oregon. The proposal would have reshaped the state’s elections into contests between the top two primary vote-getters rather than representatives from mainstream political parties. (Arnold and his wife are co-founders of the Laura and John Arnold Foundation, a donor to the Center for Public Integrity.) 

But Oregon voters were skeptical of the political designs of those two outsiders, because Bloomberg has also promoted gun control and Arnold has backed pension reforms. Sixty-eight percent of Oregon voters rejected the idea, even though the pro-reform side gave more than status-quo supporters by a nearly 5-to-1 ratio. 

Las Vegas casino mogul Sheldon Adelson, a generous GOP donor, gave $5.5 million to defeat Amendment 2, a measure that would have allowed medical marijuana in Florida. Fueled by Adelson’s money, marijuana opponents spent an estimated $5.1 million on TV ads, compared to supporters’ $2.1 million. The pot measure lost.

But two individual givers managed to change laws through ballot measures. California tech magnate Henry Nicholas gave nearly $4.3 million to pass a law in Illinois giving more rights to crime victims. Nicholas, a vocal advocate of crime victims’ rights ever since his sister, Marsy, was murdered in 1983, started his crusade for “Marsy’s law” in California and has since taken it to other states. The law to provide restitution and notification about court proceedings to crime victims passed in Illinois with 78 percent of the vote and essentially no opposition.

Rex Sinquefield, a former financial executive and now prolific political donor in Missouri, gave $2.9 million to pass the Show-Me state’s Amendment 10, which gives the Republican-led legislature more control over the budget. Observers viewed this as a shot at Democratic Gov. Jay Nixon.

“It’s not shocking that he would support a measure that adds to the institutional strength of a Republican-dominated legislature at the expense of a Democratic governor who he’s spent tens of thousands of dollars to defeat,” said Jeff Smith, a Missouri politics expert at New York City’s New School.

Healthy-sized giving

Among the top contributing business sectors, one outranked them all: Health care groups gave nearly $88 million in 2014, almost entirely in California. Casino companies were a close second, giving nearly $60 million across the nation.

The Golden State is known as the Wild West of ballot initiatives, with a long history of opponents and supporters spending eye-popping sums with far-reaching consequences. In 2014, two initiatives attracted considerable cash. Propositions 45, on insurance rate approval, and 46, which would have raised the state’s cap on medical malpractice damages and forced doctors to be drug tested, faced more than $90 million worth of opposition from insurers, hospitals and doctors. 

Anthem’s crusade against Proposition 45 was aided by other health industry organizations also willing to give millions. Kaiser Foundation Health Plan, another of California’s largest health insurance plans, gave $12.4 million to defeat both 45 and Proposition 46. 

Medical malpractice insurers Norcal Mutual Insurance CompanyThe Doctors Company and the Cooperative of American Physicians each gave more than $10 million to fight the health measures in California.

The Proposition 46 opponents framed the measure as the darling of trial lawyers, who indeed backed it and argued that it would have protected patients by reducing preventable medical errors.

“Before you vote, remember the risks about Prop. 46,” said one ad paid for by the insurers. “The trial lawyers wrote it to serve themselves, not the rest of us, mixing three unrelated provisions together to hide what Prop. 46 actually does — allow the trial lawyers to make millions, for more medical lawsuits and higher jury awards, while Californians pay when our healthcare costs skyrocket. That’s the true story.”

Hal Dasinger, a spokesman for The Doctors Company, noted the election results showed voters agreed with his company’s position: “Proposition 46 was bad for patients, bad for physicians, bad for local and state government budgets, and opposed by an unprecedented, broad list of groups.”

Giving tens of millions of dollars to ballot measure contests was worth the investment for the health care companies, according to Wendell Potter, a former insurance executive-turned-whistleblower who writes an opinion column about health care for the Center for Public Integrity.

“These insurers have enormous amounts of money,” he said. “The largest companies make billions of dollars in profits every year. They have the money to spend, and they’re quite willing to spend it to prevent any legislation or regulation that they have reason to believe might in some way cost them money or have a negative impact on profitability.”

But in 2016, the health care industry, along with its money, will take on a harder task in California: trying to pass a measure, rather than defeat one.

 The California Hospital Association is sponsoring an initiative to make permanent a program to attract more federal dollars for low-income patients’ care. The hospital group plans to round up allies and spend big, if necessary, in yet another ballot measure showdown.

“It could be 20 million. It could be 40 million. It could be more than that,” said Jan Emerson-Shea, the group’s spokeswoman. “Our decision will be based on: ‘What do we have to do to win this measure?’ If there is opposition we have to fight off, then the price tag will be higher.”

Patrons play slot machines at the Twin River Casino, in Lincoln, R.I., in July of 2011. Rhode Island voters voted to allow the Twin River slot parlor in Lincoln to offer table games in 2012. A subsidiary of Twin River spent millions on a 2014 ballot measure to expand gaming in Colorado.Liz Essley Whytehttp://www.publicintegrity.org/authors/liz-essley-whytehttp://www.publicintegrity.org/2015/02/05/16693/big-business-crushed-ballot-measures-2014

Republicans used to support the EPA, says former administrator

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William Ruckelshaus, who served as the first administrator of the Environmental Protection Agency under Richard Nixon and returned to the post for Ronald Reagan, says protecting the environment used to be a bipartisan cause. For the “Politics of Poison” project, done in conjunction with the investigative radio program Reveal, Ruckelshaus spoke recently with the Center for Public Integrity’s David Heath. He was critical of GOP attacks on the EPA and on industry efforts to thwart scientific evaluations of toxic chemicals. This transcript has been edited for length and clarity.

Heath: Many people may have forgotten that it was a Republican president, Richard Nixon, who created the EPA.

Ruckelshaus: Well, when EPA was created, as you correctly state, by President Nixon’s recommendation to the Congress, the issue of the environment was a very nonpartisan, bipartisan issue. There wasn't a lot of dispute over the need to protect public health, protect the environment.

We had all kinds of evidence flashing across television screens every morning or every evening about rivers catching on fire, smog alerts, badly polluted waters and air all over the country. And people were reacting to that and demanding action. And they saw the action was primarily at the state level and so they were strongly encouraging the federal government to take a more major role.

Q: So the Republican Party used to support the EPA?

A: It did completely when EPA was created. It was introduced by a bipartisan group, the Senate Environment and Public Works Committee, which was the principal committee in the Senate that oversaw the activities of the new agency. This was 1970.

Q: You were the first EPA administrator under President Nixon and came back under President Reagan. Have things changed since the Reagan administration?

A: Oh, yes, quite a bit. The Reagan Administration was less sympathetic than the Nixon Administration to environmental regulation, environmental laws, but nowhere near where the Republican Party has come today. There [was] still a lot of bipartisan support for environmental protection back in the '80s during Reagan’s two terms. But that’s all changed today. The issue divides almost entirely along partisan lines.

The public demand for action has declined so that those people in Congress in Republican districts are not feeling any pressure from their constituents to do anything about the environment. Quite the contrary, they’re being told, and they’re feeding ... by their own rhetoric that these things are overblown, that regulation is hurting the economy and that we ought to back away from environmental protection.

Q: Some Republicans are calling for the elimination of the EPA. What do you think of that?

A: I think that’s a terrible idea. They would believe that, too, if they ever did it, because you’re never going to get away from dealing with these issues. We still have pollution problems, whether air, water or toxic substance, whatever it might be. They’re not going away. The environment isn’t an issue [where] you can claim victory and walk away from it. You have to stay everlastingly at it because the minute you take your eye off what’s happening, pollution rears its ugly head again.

So if EPA were to be abolished, just as sure as I’m talking to you, problems would arise that will take governmental intervention to resolve them. And there would become demands for some agency like EPA, some new agency, to take over, or the Congress itself would have to wrestle with these problems. And believe me, they wouldn’t do it more than six months before they'd create a new agency to take it off their hands.

Q: We’ve found that the chemical industry, with the support of Republicans in Congress, has managed to slow the pace of EPA chemical risk assessments.  Your thoughts?

A: Well, it’s a tactic that the producers of suspect chemicals or toxins use. The longer they delay the assessment of the risk, the longer it will take for any regulatory activity ... to restrict the use of that particular substance. It’s simply a tactic to use; it’s not the only one but it is a tactic they use. It’s unfortunate and sometimes very effective. It stalls regulatory action, in some cases for years. [Members of Congress] also reduce the amount of money available to EPA to test these chemicals so that in a timely fashion they can figure out which ones are really bothersome and which ones we ought to be paying attention to.

Q: We reported last year that the EPA took a new look at arsenic in 2003 and found it was far more potent than had been believed.  With the help of Congress, that assessment was delayed indefinitely. What is the risk of such delays?

A: The risk is that the public will continue to be exposed to what may be unacceptable limits of these chemicals which ... in the case of arsenic, is a known carcinogen. Arsenic causes other problems as well, as we’ve known for years. Any time you have a new risk assessment on the way, the longer you delay it ... the higher the risk for the public that something terrible will happen.

Q:The EPA in 1998 started to look at formaldehyde and concluded that it could cause leukemia. But to this day, because of political pressure, it has not been able to get that information published. Do you see this as a problem for the public?

A: Sure it is. Anytime that a scientific group or the EPA or any other agency that has regulatory authority over these kinds of chemicals finds something wrong it ought to be immediately published. There ought to be an open, transparent debate over whether the risk assessment is correct. And if it is correct [it] should trigger additional regulatory controls to protect public health. To the extent that that’s delayed or stalled in some way it’s really unconscionable, particularly if it’s done on behalf of the industry that manufactures the chemical and has economic benefit associated with it.

Q: Why do you think industry attempts to delay science are succeeding?

A: The public isn’t paying enough attention. First place, these issues are complicated. There are legitimate debates over the impact of a substance on human health or, for that matter, even animal health or environmental protection. Those legitimate concerns should be argued ... on the risk assessment side of things. The longer you can stretch out that risk assessment, the more doubt you can throw on the assessments already done as to the impact of the substance on human health. The longer the delay, the longer you can continue to market the product in ways that continue to make a profit for the manufacturer.

Q: In 2008, the Government Accountability Office said the EPA was so far behind in doing chemical assessments and was producing so few of them that the Integrated Risk Information System was virtually worthless. When President Obama took office, one of his pledges was to try to fix that. Instead, we have seen fewer assessments in the last three years than ever before. What are your thoughts about that?

A: Well, I think there’s two things could be causing that. One is that ...Congress has cut back on the amount of money EPA has to conduct these risk assessments to manage that program. If you want to slow it down, just provide less people to do the work so that the scientists necessary to conduct the studies simply aren’t there. That’s one way of stalling.

The other way is just to do everything you can to throw sand in the gears of the whole process by stretching out the timeframe. Doing studies that should be included according to the proponents of the studies in the risk assessment originally. This stretches out the time in which the study has to be made and stretches out the time that the product remains unregulated or not regulated as sufficiently as it should be.

There are a lot of things you can do if you’re not trying to get at the truth; all you’re trying to do is stall. These assessments are not simple to do. They’re expensive and they take a long time as they should because we ought to be certain about what we think the risk is when we begin to regulate it. But if the only purpose of [an] additional call for studies is to delay, that’s simple unacceptable.

Q: When you were administrator of the EPA, did you see this kind of pressure?

A:  Not nearly as much in the beginning as ... there is today. In the beginning -- I mean in 1970, when EPA started -- there were unhappy industries that were affected by regulation. In some cases they expressed that unhappiness in very stringent terms. The automobile industry descended on the Congress with all four chief executive officers of the major automobile companies in this country in 1970 to try to delay or kill the Clean Air Act. It passed 73 to 1 in the Senate, and only a couple of dissenting votes in the House.

So, that kind of pressure that was put on the Congress, or for that matter the EPA, it just wasn’t effective when the public is alert watching what’s going on and paying attention to the end result.

Q: Do you think industry has changed the way it lobbies the EPA or lobbies Congress to block the EPA?

A: It clearly has. The industry has clearly become more sophisticated in the way in which it contacts EPA. They do it through the Office of Management and Budget. There is a special part of the OMB, the budget agency that looks at the risk-cost benefit of any regulatory action. It’s the president’s effort to control an agency that might be making decisions that he considers unwise. The industry often will try to impact that analysis going on at OMB.

Q:The Obama administration made it a priority to stop political interference in science; the president even mentioned this in his first inaugural address. Yet he seems not to have been able to do that.

A: He can and should, and I couldn’t agree with him more that there should not be any political interference, because it’s science. If people can’t trust the government to do honest science, then what can they trust them to do? What you should do with the information that the scientific method generates is a legitimate discussion to be had in the society. A legitimate debate, but the facts should be the facts. Whatever data comes from studies should be used as factual data, assuming it can be duplicated and through the scientific method verified. There should be no interference with that factual assessment.

Q: Do you think government should be involved in protecting the public health?

A: If it isn’t the government, who’s it going to be? You can’t rely on somebody manufacturing something that has an economic benefit ... Now, in some cases they are concerned about public health and ... their conscience will tell them that this should not be sold in the manner in which it is used....

I think what we’re seeing now is an extreme swing of the pendulum against regulatory action by the government. But I personally believe something will happen that will wake people up so that they’ll see we do need the government to help with these kinds of problems. Then we’ll demand that the government step back in and take stronger action. We just haven’t had one of those for quite a while.

William D. Ruckelshaus, the first federal Environmental Protection Agency administrator, speaks to reporters in Los Angeles as his agency proposed gas rationing for most of southern California as an anti-smog measure in January, 1973. The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2015/02/05/16695/republicans-used-support-epa-says-former-administrator

The defense industry's friend inside Congress and outside Congress

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Newly-retired House Armed Services Committee chairman Buck McKeon is opening a consulting firm in Washington, becoming one of the latest lawmakers to shift from overseeing a major U.S. industry and writing laws that affect its health to peddling influence in the capital, most likely on behalf of that industry.  

McKeon, a severe critic of the budget sequestration law's impact on national security, has long been close to the defense contractors and weapons manufacturers that depended on a stream of funding authorized by his committee. Since 2003, ten of the largest defense firms and their lobbyists contributed more than a million dollars to his political campaigns (at least $1,054,275 in 2013 adjusted dollars, according to our calculations), more than to any other member of his committee.

McKeon firm's new website is hardly subtle about his objectives, with the headline "RESPONSIVE. RELIABLE. RESULTS" plastered across a panorama shot of the U.S. Capitol, with another headline touting "decades of experience and a vast network."

Like all House members, McKeon is barred from lobbying his former colleagues for the first year after leaving Congress. But that didn’t keep him from bluntly advertising his ability to influence those who make policy and set budgets – by providing "strategic analysis, advocacy and comprehensive government relations," according to a press release he issued on Feb. 2.

As chairman and CEO of The McKeon Group, he'll provide the "overall vision and direction," according to the release. “Having served” as Armed Services chairman, “Mr. McKeon looks forward to using his background and experience to provide strategic advice to clients, while continuing to be outspoken for a strong national defense.”

If McKeon eventually registers to lobby for the industry, he would be joining at least 97 other former members of Congress that have lobbied for the largest defense companies from 2003 through 2014, according to CPI's tally.

Robert Cochran, the former chief of staff in McKeon's congressional office, will be a senior partner at the firm, but without the immediate lobbying constraint meant to cover McKeon. Cochran has been lobbying his former colleagues on Capitol Hill since January 2013, according to a Senate registration, working at the Porter Gordon Silver firm in Washington. His clients there included the Florida-based Harris Corporation, which makes military radio encryption products and communications software, and California-based Aerojet Rocketdyne, a rocket and missile manufacturer.

Cochran ran McKeon's former political action committee, the 21st Century PAC, before it shut down last month. And last fall, he was listed in brochures published by the Reagan National Defense Forum as a fundraiser. The forum was held in November at the Reagan library located in California, and McKeon was the honorary chairman.

The Forum’s symposium and awards dinner were attended by many defense officials, journalists, lawmakers and industry representatives, including Marillyn Hewson, the head of the F-35 military jet manufacturer Lockheed Martin, and Wes Bush, the CEO of Northrop Grumman, the maker of the Global Hawk reconnaissance drone. Lockheed Martin paid $25,000 to the event's host, the Ronald Reagan Presidential Foundation, while Northrop Grumman -- a Platinum sponsor for the event -- paid $250,000, according to disclosures the companies filed with the Senate and the House of Representatives.

In a brief phone conversation, Cochran said the firm has already retained "a couple of clients" but then promptly said he had to go, and didn’t return further calls.  A request for comment left on Rep. McKeon's phone wasn't returned.

The firm's new offices are located in the same Capitol Hill building that houses the Charlie Palmer steakhouse, a noted lobbyist hangout, and several other lobbying groups, including one of D.C.'s largest lobbying firms, Van Scoyoc Associates, which represents major defense contractors such as Lockheed Martin.

Van Scoyoc chief of staff Ross Kyle is the registered agent for The McKeon Group, according to Washington, D.C. incorporation records. Kyle said in a phone conversation that there was no connection between the two firms, but that "I know the lawyer who was filing their documents. You need to be a DC resident, so he asked me to file the papers." The lawyer, identified by Kyle as Gary Marx of Marx and Lieberman, is also the general counsel to Van Scoyoc Asssociates, according to Marx and Lieberman’s website.

 

Defense Secretary Chuck Hagel walks with U.S. Rep. Buck McKeon of California at the Ronald Reagan Presidential Library in Simi Valley, Calif., Nov. 16, 2013.Alexander Cohenhttp://www.publicintegrity.org/authors/alexander-cohenhttp://www.publicintegrity.org/2015/02/05/16719/defense-industrys-friend-inside-congress-and-outside-congress

Scientist with industry ties won't lead EPA chemical risk-assessment program

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The Environmental Protection Agency won’t be hiring a scientist with strong ties to industry to run its chemical assessment program. As the Center for Public Integrity reported in December, one of two finalists for director of the Integrated Risk Information System (IRIS), which evaluates the health risks of toxic chemicals, runs a nonprofit that does substantial work for the chemical industry.

On Thursday, the EPA told its staff it was giving the job to Vincent Cogliano, who has been acting director of the program since 2010. Cogliano was previously the director of the International Agency for Research on Cancer Monographs program– which identifies environmental factors that can increase the risk of cancer –at the World Health Organization.

Political interference from the chemical industry and Republicans in Congress has prevented the IRIS program from completing many chemical assessments, even though the Obama administration promised to break the logjam. The EPA relies on these assessments to determine whether new regulations are needed to protect the public.

The EPA had been considering Michael Dourson to run the IRIS program. Dourson runs a nonprofit consulting group called Toxicology Excellence for Risk Assessment, or TERA.

An investigation by the Center for Public Integrity and InsideClimate News found that TERA has strong financial ties to industry. More than 50 percent of the peer-review panels TERA has organized since 1995 were for studies funded by industry groups. TERA also runs a risk-assessment database that receives financial and in-kind support from many companies and government agencies.

Dourson has been harshly critical of the IRIS program and promised to bring in outsiders to help with chemical assessments if he were tapped to lead it.

Michael DoursonDavid Heathhttp://www.publicintegrity.org/authors/david-heathhttp://www.publicintegrity.org/2015/02/06/16722/scientist-industry-ties-wont-lead-epa-chemical-risk-assessment-program

Black history and heritage bulldozed by gas boom

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WESTLAKE, La. — Stacey Ryan already knows where he’ll be buried. 

It will be in Perkins Cemetery, the same place his mother and father were laid to rest after dying from cancer. It’s where his aunts, uncles, grandfather and great-grandfather are interred, having been felled by various malignancies, diabetes, and ailments of the heart, respiratory system and pancreas.  Most of Ryan’s family is there, along with almost everyone else who ever died in Mossville, an unincorporated area founded by freed slaves.

Soon, the cemetery may be all that is left.

Sasol North America, the domestic division of a South Africa-based energy and chemical company, has begun offering voluntary buyouts to many of the 300 or so remaining inhabitants of Mossville. Some properties may be expropriated come February. By 2018, the land Ryan and other holdouts have fought to keep will be consumed by an $8.1 billion ethane cracker and a multibillion-dollar gas-to-liquids facility, a massive addition to a plant Sasol already operates nearby.  

The state of Louisiana says it will allow the facility to release up to 10.6 million tons of greenhouse gases and 3,275 tons of volatile organic compounds such as benzene, a carcinogen, into the atmosphere each year. This is on top of the 963 tons of pollutants that were discharged into the air by Sasol and other companies within the 70669 ZIP code last year, according to the U.S. Environmental Protection Agency.

“With the plans they have,” Ryan said, “Mossville just sits in the way.” 

The Sasol project is among at least 120 of its type planned around the United States, according to data compiled and analyzed by the Environmental Integrity Project, a research and advocacy organization. Motivated by an abundance of cheap natural gas unleashed by hydraulic fracturing – fracking — companies like ExxonMobil and Shell want to build or add on to petrochemical plants, oil refineries and fertilizer plants in places like Mont Belvieu, Texas, and Monaca, Pennsylvania.  They have asked state regulators for permission to release a collective 130 million tons per year of carbon dioxide equivalent, a measure of the global-warming potential of certain emissions.

Read the rest of the story here.

Mossville is an unincorporated area of Westlake, Louisiana, founded by freed slaves. Sasol North America has begun buying out the remaining residents.Eleanor Bellhttp://www.publicintegrity.org/authors/eleanor-bellTalia Bufordhttp://www.publicintegrity.org/authors/talia-bufordhttp://www.publicintegrity.org/2015/02/06/16724/black-history-and-heritage-bulldozed-gas-boom
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