Steve Klingaman's Open Salon Blog

Is Democracy “Nearly Moot?”

Thu, 24 May 2012 08:05:59 -0400

Image: blog.timesunion.com,

The May 13 New York Times feature “Sunday Dialogue: Making Taxation Fairer” included some intelligent suggestions on the topic, but what struck me was a deeper current of pessimism that girded the entire discussion. The pessimism percolated up to the article subhead, “Readers offer ideas for tax reform but doubt it will happen.” One of these readers, David Berman, of New York, wrote two remarkable sentences that deserve a life beyond a letter.

He wrote:

What we are now living through is a crisis of counterreformation, in which the corrosive influence of money in our politics, made quasi-legitimate by the Supreme Court’s catastrophic decision in Citizens United, has made the government more responsive to the donor than to the voter. It has made the democracy nearly moot.

Is democracy “nearly moot,” and if so what should we do about it? Does “the corrosive influence of money in our politics” render our votes nearly meaningless? It is difficult to conclude that democracy is anything but degraded by the fact that Congress, and many state legislatures, are “more responsive to the donor than to the voter.” Common Cause has been saying that for a generation. Berman is largely correct. It is worse now, and it has been quasi-legitimized by Citizen’s United.

The funny thing is that Citizen’s United was decided by a Supreme Court that was legitimized by the imprimatur of the ballot box. Elect a president, get a justice. So we can be pretty sure democracy is not entirely moot, even as its secondary effects degrade democracy. The cure for Citizen’s United is more democracy, real democracy of the type that decides close elections. Yet the perception that democracy is nearly moot serves in large part to suppress participation in the democratic process.

That isn’t to say that dissatisfied citizens aren’t free to take to the streets and vote and contribute to grassroots campaigns that at minimum stand a snowball’s chance in Hell. What a nearly moot democracy needs, in short, is more democracy.

The Tea Party has to a large degree made the Old Republican Party “nearly moot,” while returning to its paleoconservative roots of the 19^th Century and, more precisely, the populist right of the 1930s. It seeks to prove that democracy is not nearly moot by attempting to use the vote to dismantle government. You see it in so-called Republican candidates who say things like “the Constitution authorizes government to just two things,” whatever they happen to think those two things are. That’s the Tea Party at work attempting to prove that democracy is not nearly moot.

Thomas Jefferson and H.L. Mencken both said we get the government we deserve. That sentiment is truer than many who hate government would care to admit. We deserve to have our electoral muscle trumped by corrosive money because we allow it. But we have moved too far from a defensible balance of what is called free speech toward an outcome, either way, of bought and sold politicians. Many despair of ever righting the ship of state. That fear makes sense in the present political moment.

The letter writers in the Sunday Dialogue exercise were pointing out that we have moved beyond gridlock, beyond existential paralysis, to the capture of government, zombie government. Without swift boatloads of money you cannot run for high office, period.

John O. Fox, author of “10 Tax Questions the Candidates Don’t Want You to Ask,” whose initial letter kicked off the dialogue, wrote a follow-up stating, “Trillions of dollars of debt pile up because Congress refuses to require Americans to pay for the programs they want or the wars we fight.” And we seem, at all costs, incapable of settling the big questions with any alacrity.

Yet, city councils, county boards, and sometimes even state legislatures, prevail, against heavy odds, to solve some of our problems. That, too, is democracy. It’s not nearly moot.

On the other hand, Citizen’s United perfectly suits the needs of one-percenters like billionaire Joe Ricketts and Big Frackers like Continental Resources Inc., whose CEO Harold Hamm recently became Mitt Romney's top energy adviser, contributing $985,000 to a Super Pac supporting him. We have little to no defense against that in the aggregate. In the end, you rarely beat Big Money. I am concerned that we will not until things get much worse. Like in Greece.

Mr. Fox doesn’t say that’s were we are heading, but he says that income taxes must rise after the 2012 presidential election as the economy continues to recover, assuming it continues to recover. Of course he’s right that taxes must rise. We’re facing a mountain of deficit and debt. He says that the middle class will eventually have to shoulder part of that burden no matter what. But wait, if the Republicans win that’s impossible. Is this, I wonder, how we will find our way to Greece, as the debt incurred to fund the government, including the stimulus commitments made during the recession, spiral out of control because we simply refuse to pay?

Anyone with half a brain knows the federal government doesn’t just do two things, whatever they are. And anyone with half a brain knows that you can’t address the debt we have accumulated by cuts alone.

The tragedy of democratic rule is that it is so reactive. Things have to get really bad before they get any better, if they get better. So what do we do about our nearly moot democracy? To some extent, we do what we have always done: we throw the bums out. And, as our financial crisis begins to spiral out of control—as it might given sufficient paralysis and legislative degradation—we will attempt eleventh-hour Grecian Formula fixes. But it would be so nice, just once, if we could muster the resolve to diminish the corrosive effects of big money through responsible regulation. Of course, it seems that in order to do that, we will have to wait out the bums already on the Supreme Court, the bums who took their seats as an indirect result of nearly moot democracy in action.

Monetizing Misery: Startling Abuses in Debt Collections

Thu, 17 May 2012 08:05:41 -0400

Minnesota Attorney General Lori Swanson stands up for patients at their most vulnerable.

Image: minnesotapublicradio.org

Benjamin Braddock, the clueless graduate of The Graduate, had it better than kids today. When the smarmy Mr. McGuire leaned to say, “Just one word…Plastics,” it was grim enough. Today that word might be “Collections.”

Two recent disclosures of collection practices in Minnesota highlight how high the fortunes of the industry have risen—and the depths to which it has sunk in monetizing misery.

One case is the Bloomberg News disclosure that Educational Credit Management Corporation [ECMC], a Minnesota-based student loan guarantor paid one debt collector, Joshua Mandelman, the astonishing amount of salary and bonus pay totaling $454,000 in a single year for dunning ex-students in default on their loans. Reporter John Hechinger wrote that while Mandelman made off like a bandit, the few real debt counselors employed by the corporation—those who advised student prior to default— were paid a paltry $40,000 a year.

ECMC CEO Richard Boyle earned $1.1 million in 2010 at the helm of the company that bills itself as “one of the country's top 10 guaranty agencies and the U.S. Department of Education's designated provider for student loan bankruptcy services.” Four additional senior managers earned more than $400,000. But here is the kicker: ECMC is a nonprofit organization. Its targets are among the nation’s most beleaguered college graduates. By way of context, Harvard University president Drew Faust earned a measly $822,000 in 2008-09, and that included benefits and allowances. Disgusted yet?

Monetizing Medical Misery—at your Bedside!

How about a debt collection company that bullies prospective patients in an ER Waiting Room to collect outstanding debts—and prepayment of prospective fees? How about a debt collection company that states in on-the-record emails:

· Opportunity: Labor and Delivery represents excellent opportunity to increase cash collections

· It’s noon and we are only at $5,000…not so very good for where we are typically.

· Any free time…should be spent rounding with staff and making sure they are…asking for money from EVERY patient they can!

Then, when hospital executive Joline Storla questions the consulting firm’s methods, collection executive Peter vanRiper replies, “…we’ll continue with it as-is. Our experience is that collections performance just doesn’t get to target performance without this level of rigor.”

The hospital chain? Fairview Health Services, in Minneapolis. They even operate the University of Minnesota’s flagship hospital. They are “my” hospital. The collection agency? Chicago-based Accretive Health Inc. Remember that name. They may be after you at some point in the future. Just how stupid was the hospital? They turned collections over lock, stock, and barrel to a company owned by a Wall Street hedge fund. They gave—and this truly is astonishing—the power to hire and fire hospital workers to the outside firm. “We’ve started firing people that aren’t getting with the program,” wrote Accretive employee Andrew Cook to the hospital’s management team in 2010. Fairview severed its ties with Accretive in April.

Gutsy Attorney General Takes on the Bad Guys

This material is all part of a six-part report by Minnesota Attorney General Lori Swanson, the result of a thorough, exhaustive investigation by her office. It is a refreshing change to be able to access the report first hand and learn the real dirt about this little shop of horrors. The response to the report has been varied. The weirdest moment was when Chicago mayor Rahm Emanuel wrote to Swanson saying, “I request that the parties cease efforts to publicly prosecute this matter and rather try to resolve the matter privately…I also request that there should be no further contact between your Office and the company's clients pending the outcome of the meeting. Please confirm to me that is the path we are on. ” Emanuel buttresses his points by pointing out what a health care big shot he used to be and implying that Accretive, despite its methods, is a force for good in Chicago. Talk about being bullish on bullies.

Yesterday the Minneapolis Star Tribune wrote a sidebar that revealed a bunch of Emanuel’s former colleagues are willing to sully their names by advising Accretive on proper collection methods as part of a "policy study panel." They include: Michael Leavitt, former secretary of Health and Human Services, Donna Shalala, former HHS secretary; Tom Daschle, former U.S. senator from South Dakota; William Frist, a physician and former U.S. senator from Tennessee, whose family founded the for-profit Hospital Corporation of America [HCA]; and Jamie Gorelick, former deputy U.S. attorney general under President Clinton. Leavitt showed his hand early by intoning, “in order to assure hospitals remain financially viable ... they must assist these same patients in making financial arrangements for payment.'’ In the present context, that verb, “assist,” is insulting. Accretive's operatives, by the way, were called "financial counselors." Clearly, this panel was assembled with Emanuel’s help. It is folly on their parts to participate in a panel run by the offending company. Meanwhile, Accretive’s stock price is tanking.

And what of Fairview? They have jeopardized their nonprofit 501(c)3 status on a number of fronts, the most egregious of which is the dilution of what must be an entirely charitable purpose by turning over the day-to-day management and functionality of some of their most sensitive operations to enrich Wall Street investors. This represents no less than a fundamental abrogation of mission. Never mind that Dr. Dave Moen, president of Fairview Physician Associates, a 1,300-physician network within the hospital, had a stake in Accretive and his son had a good job there, or that the son of Fairview President and CEO Mark Eustis also works for Accretive. At least they won’t be hunted down by student loan collectors from ECMC.

According to Professor David Shultz, a lawyer and expert in business ethics and governance of nonprofits at Hamline University, “the conflicts were severe and not defensible simply because they were disclosed,” according to the Minneapolis Star Tribune. "This is a pretty bad one,'' he added.

And oh, I forgot…Accretive lost an unencrypted laptop containing medical data—these are bill collectors, mind you—for 23,500 Minnesota patients. The sensitive data included HIV status, mental health status, a “frailty” measure, and an identification of patients classified as “outliers,” e.g., prime targets for hardball persuasion. All this was reported here by Attorney General Swanson.

What does all this represent? More than a measure of a loss of decency, this is a portends a measure of things to come in a potential wave of impending deregulation, the likes of which we have yet to fully comprehend, if the Republicans win in Washington this fall. (And Rahm, by the way, that was pathetic behavior.) The reason: as an industry collections could be bigger than gas. It could be bigger than North Dakota oil. It’s bigger than you think and it’s growing by the day. Who needs plastics or petroleum when plain old muscle will do?

* * *

UPDATE: On May 24, the board of Fairview Health Services voted not to renew the contract of CEO Mark Eustis, 61, who subsequently announced his retirement.

Is Facebook Evil? Yes!

Thu, 10 May 2012 08:05:16 -0400

Image: newparadiselaboratories.org

Facebook, it seems, has a privacy issue. Enfant-CEO Mark Zuckerberg recently instructed the investment banks handling its IPO to shut their faces when it comes to news leaks about the company. Turns out juicy details leaked all over the web can make a corporate person feel compromised. After all, who wants one’s past indiscretions out there for all to see?

The issue of online privacy and data aggregation has become a hot topic—finally—in the wake of the Facebook IPO. Max Schrems, 24, the Austrian law student who sued Facebook for its complete record of his personal data was recently astounded to receive 1,222 pages of information. Some of it made sense—old Wall postings and photos—but some of it was material he had never even entered into Facebook. His action spurred more than 40,000 requests for Facebook data in Europe.

Online privacy is different in Europe, and online providers have responded with privacy policies that guarantee far more rights to users than can be found in Terms of Use agreements here in the U.S. Surprised? I was. After all, we have the Constitution. We have emanations of a right to privacy; we have guarantees of personal liberty that the Brits don’t. But not online.

The issue goes far beyond Mom’s admission not to put drinking photos online—though that advice remains compelling. And yes, more than 70 percent of human resource professionals have denied an applicant a job offer based on what they found online. (Never mind that in the European Union prospective employers are barred from googling job applicants.) On this side of the pond we hear stories like that of Ashley Payne, the Georgia teacher who was fired for a Facebook photo of her—on vacation—with a drink in her hand.

But have you thought about what lenders, credit agencies, insurance companies, and yes, prospective employers, can do with reports of your aggregated online data, as purchased by third party aggregators? Let’s say you posted Wall posts about a medical problem you or your child faced. Let’s say it was congenital heart trouble—a no-fault diagnosis if there ever was one. Keyword searches can gather this type of data for sale to the insurance industry. That information could result in you being dropped for health insurance coverage, life insurance policy refusal, or even the loss of a prospective job. Don’t believe me? Spokeo is a third party aggregator that offers exactly this type of information to human resource offices. I would bet they have information about you already on file, and yes, some of it may have come from Facebook. And it’s very hard to scrub away.

Facebook’s astounding net worth amounts to about $130 each for each of its 845 million subscribers. Do you think they earn this by those pop-up ads that nobody clicks on? Research (and investment bank leaks) show that the click rates on those Facebook ads are infinitesimal. That leaves data aggregation revenue from third party advertisers and other users.

And what kind of users are out there? The IRS is using online profiles against taxpayers under investigation. Let’s say your son or daughter posted some really great photos of a recent vacation to Rio for the whole family, just months after you filed your 1040 showing gargantuan business losses that included some hefty business expenses in Rio. Yes, people do. And the IRS finds them this way.

As a public company Facebook will be under pressure to maximize quarterly profits. That means selling your personal junk for profit. That is, after all, the bargain you made when you signed up. You receive the joys of free posting of all manner of personal information in exchange for Mark Zuckerberg & Co. to with it what they please.

In all probability, Facebook as it is presently monetized is a market distortion, a chimera. It must begin to sell more of your stuff to justify its market capitalization. And while the more laissez-faire readers in the audience may hold that users can always just quit—“Nobody is forcing you to put your junk online.”—I hold with the Europeans that users should be able to post and retain an appropriate level of privacy. This can happen if companies are forced to accept some basic rules and play by them. If Facebook is evil, it is probably evil more in its potential for harm than actual harm-to-date. But between Facebook and Google, and other players with less in the way of marquee names, the ground is shifting under our feet. This shift represents a substantial—and real—loss of privacy, and no one from the corporate world is letting on that there is anything, well, weird, about all this.

Google Too? (Yes!)

Google just sent notice of a change in privacy practices a few months ago. An Op-Ed by Lori Andrews in the February 5 New York Times, “Facebook Is Using You,” points out that you may want to consider not using Google to search terms like, “diabetes” or “pregnancy” in the future. Yes, I know, their slogan was “Do no evil.” But that was then, this is money. And don’t even get me started on how the data in your gmail account will be monetized.

What we need to do, for Facebook, for Google, for Spokeo, is wake up and smell the surveillance. We need to demand European-style protection policies, such as the right to scrub any and all data we choose from whatever providers we choose. Such a law was proposed last month by the European Commission. According to Somini Sengupta, in “Should Personal Data Be Personal?” another February 5 New York Times Op-Ed piece, quoting Simon Davies, the director of the English NGO Privacy International, “Europe has come to the conclusion that none of the companies can be trusted.”

We need to adopt the call initiated by Lori Andrews, the author of “Facebook is Using You,” that we be given the option to register for a national Do Not Track status, modeled on the Do Not Call lists of yesterday. Sure, Facebook can keep my dirt, Google, too. But they can’t sell it in any form that allows individual identity tracking. And they can’t steal my face.

So go ahead, post your party photos. Very soon, with the help of facial recognition algorithms, you won’t even have to tag them. And the fact that you are standing in the background of a shot, a sheet and a half to the wind, holding a Bud Lite Platinum, and a friend of a friend will post that memento, and in a few months' time you may be receiving communications from parties who are dropping you, outing you, leaving you, or firing you. It’s a sharing thing.

In the meantime, you really should pay attention to all those horrid little privacy settings, the ones that are designed to give you a headache the moment you think about them. And don’t get me started on all those Facebook-related apps tracking you

UPDATE: May 10, 2012 2:00 p.m. CDT

I just received an email from Vanessa, Director of Public Relations at Spokeo who stated:

I read your piece about Facebook and need to let you know that Spokeo does not provide information to Recruiters. Please note that it is specifically in our terms of use that using Spokeo for this purpose is prohibited.

Please let me know if you can update your article. I understand that Lorri Andrews also reported this incorrect information and we have been working very hard to make sure and have this corrected.

I did indeed harvest the data in question from Lori (not Lorri) Andrews’ piece and have no additional corroboration of it, except, in part, my own eyes. Ms. Andrews wrote:

A company called Spokeo gathers online data for employers, the public and anyone else who wants it. The company even posts ads urging “HR Recruiters — Click Here Now!” and asking women to submit their boyfriends’ e-mail addresses for an analysis of their online photos and activities to learn ‘Is He Cheating on You?’”

By the way, here are Lori Andrews bona fides, “Lori Andrews is a law professor at Chicago-Kent College of Law and the author of ‘I Know Who You Are and I Saw What You Did: Social Networks and the Death of Privacy.’” I have heard her speak on the Bob Edwards Show. She is awesome. I know of no New York Times retraction for this statement and even seem to recall seeing the HR Recruiters ad myself. I will print a copy of the New York Times retraction the minute I hear of it. In the meantime, Vanessa is welcome to comment here, now that she is a member of Open Salon.

This is not the first time I have written about Spokeo. In an article for Wise Bread I wrote this back in 2010:

I had heard that Spokeo was a particularly impressive site, so I went there first. The personal data is indeed impressive; we'll get to that in a minute. Another button caught my eye, right off. It read: "Control Your Identity — Take Control Now." Upon clicking, I was taken to a page that read, "Monitor and control your public information with IdentityForce™ protection."

That's right. The same site that was causing me all this angst was also selling the solution — a solution just like Reputation Defender [now Reputation.com]! I was immediately transported back to Econ 101. The way to riches in America is to create a perceived problem and solve it. Like yellow teeth and Pepsodent. Or wrinkled brows and Botox. But Spokeo has taken this one step further. They have created an actual problem and the simultaneous solution. This is like a spammer selling a no-spam solution.

So, Spokeo, I hope we can agree to disagree about the nature of your business while we wait for that retraction.

Here’s what Spokeo had on me back in 2010:

They had my address, my birth date, the names and ages of my kids, my home phone, my wife's name, photos, a photo of my house, a flattering assessment of my real estate worth, assorted photos, and much, much, more, as they say in the biz.

But, in their favor, when I engaged in a three-day process to have my data removed, it was! Thanks, Spokeo!

* * *

Correction: It was actually a three-step, one-day process to have my data removed.

Screeenshot from a link

provided by author Lori Andrews

Frontline’s “Money, Power & Wall Street”

Wed, 2 May 2012 13:05:50 -0400

“Money, Power & Wall Street” Episode 3 plumbs the inner workings of the Timothy Geithner–Barack Obama dynamic.

Frontline’s “Money, Power & Wall Street” Episodes 3 &4 aired on PBS affiliates nationwide last night. Episode 3 covered the federal government’s response to the economic meltdown during the waning days of the Bush administration and the first ten months of the Obama administration. Most striking was the coverage of the relationship between Timothy Geithner and and President Obama—two peas in a pod it turns out. The ironic takeaway: Geithner played to Obama’s weak side—his cautiousness—by advocating the strength of the steady course. In so doing, Obama forever relinquished his potential air traffic controller strike moment in refusing to oust a bank CEO and put a bank on a short leash as a way of demonstrating that he was serious about reform.

Geithner won the day over competing voices within the administration by correctly assessing Obama’s aversion to downside risk. Yet it is likely that if—of all people—the president’s chief economic advisor Larry Summers had won the day and we had kicked a little bank ass, banks would be compliantly lending today. Instead, as Texas Republican Representative Jeb Hensarling so aptly put it, the response to the last economic crisis planted the seeds of the next, as we now only have Too Big To Fail on steroids as well as banks that have not separated house trading from client relations, fueling the inherent conflict of interest that has spread like mold since the repeal of the Glass-Steagall Act.

Obama’s response to the U.S. banking crisis helped fuel the rise of the Tea Party, the desertion of the left, as well as the eventual rise of the Occupy movement. It was indeed a short honeymoon. In its aftermath, President Obama seemed strangely quiet. We heard no voice of moral outrage, á la Roosevelt, taking on the corporations in his day. Why? Because from a reform-minded point of view Obama caved. Instead, Obama seemed to be on the sidelines, even after he turned away from the meltdown to push health care reform.

In the aftermath of Geithner’s phony stress tests, Wall Street took Obama’s measure and found him wanting to such a degree that when Obama showed up on Wall Street to scold them in a speech on the anniversary of the Lehman Brothers collapse in September 2009, virtually no Wall Street leaders bothered to show up, and the few low-level minions who did were chewing gum and checking their watches. The titans just didn’t care. The banks had won, and by the time Congress took up the Dodd-Frank financial reform act, the banking lobby owned Congress once again. That was all she wrote.

That Larry Summers would emerge to be the voice with which I most closely identify is hard to stomach, Arrogant, full of himself, Larry was not “my guy.” Yet, if the perspective of Frontline holds, he was the latent reformer—and he was aggressive about it. Geithner held him off by sticking doggedly to the position that we mustn’t upset the delicate equilibrium. His platform of “cautious encouragement,” could have only come from an insider, a person who was married to the status quo.

And yet, as Episode 4 of the program reinforced, the entire response to the meltdown was based on a misapprehension of banking. Derivatives had become the lifeblood of the industry, and the frontiers of the banking had moved on to “regulatory arbitrage,” gaming the system to a degree that undermined the financial existence of nation-states such as Greece, Italy, Iceland, and, to the lesser degree, the United States. In Greece, the Goldman Sachs introduced toxic currency swaps containing “off balance sheet loans” that allowed Greece to lie to the world about its rampant indebtedness.

The “no WMD” moment of the national response to the meltdown was the belated revelation that banks had borrowed and received $7.7 trillion in loans and guarantees from the Fed. This was a secret. Had we known, well, who can say? But banks were at their weakest even as we were being told they were on the mend, in March 2009.

Some Democrats might argue that there is no reason to dwell on all this during a presidential campaign. Certainly despite his weaknesses, President Obama has my vote. But we need to acknowledge who he is, and what his policies have not wrought. We did not learn from this crisis. Viet Nam taught us that we cannot ignore a rot within our own party. And for those who prefer to repeat history, we need to remember that this is not ancient history. Viet Nam, for example, colored U.S. politics for a generation. This recession and its aftermath is looking to be a ruinous ten-year episode all on its own, and we didn’t even score the tee shirt.

Anyone who puts the slightest credence in the Frontline documentary will consider the charge that Obama is a socialist to be laughable in the extreme. In fact, it could be good for him politically to have someone beat the drum with this material reinforcing what a hardcore centrist he is. Geithner will go down in history as the guy who stayed true to his school, his buds in überfinance, and sold out Main Street in the process. At least I hope that is how he is rendered.

We had only the narrowest of windows through which to enforce reform on a corrupt financial sector and now it’s gone until the next meltdown. And let’s be clear. There will be another meltdown. Maybe not for a while, maybe Europe will contain its current contagion, (largely induced by American investment banks selling toxic products, but more than that, toxic ideas), maybe it won’t be for a generation. But it will happen. All the seeds are there, courtesy of the Obama administration’s response to the most recent crisis.

Coverage of the meltdown as provided by Frontline moves us toward a historical perspective of the events that occurred in 2008 and 2009. Mistakes, as they say in the passive voice, were made. To progressives, and to people like Robert Reich, Joseph Stiglitz, Christine Romer, and Paul Volker, who all appear on camera in the documentary, the administration’s response leaves a bitter taste in the mouth. Personally, I don’t subscribe to any black-and-white notion of the president’s record—I’m not just going to say rah-rah—despite the fact that the opposition will exploit any weakness it can find. In this case, it is unimaginable that there exists any salient free marketeer critique of the Bush/Obama administration’s response to the crisis that would ring true to a viewer of “Money, Power & Wall Street.” Unless you’ve already read the stack of books already published on the meltdown, the documentary series is a worthwhile investment of four hours of your time.

ALEC a Charity? No Way!

Thu, 26 Apr 2012 08:04:50 -0400

winningprogressive.com

The public interest group Common Cause filed a long overdue complaint challenging the charitable nonprofit status of the American Legislative Exchange Council (ALEC) last week. The complaint seeks to strip ALEC of its 501(c)3 status, a status that connotes broad charitable benefits to the public that merit a tax exemption for donations to the organization.

The Common Cause action is fueled by the organization’s research into the actual workings of the shadowy lobbying juggernaut masquerading as a nonprofit, based on inside documents newly and previously acquired by Common Cause and aligned organizations. It is not a pretty picture if you happen to believe in elective government or the good works of the nonprofit sector.

A technical word here: there are many types of nonprofit organizations, a veritable alphabet soup of public purposes and private benefits to members. Of these, only 501(c)3 organizations are charitable organizations per se. Others, like 501(c)4s and 501(c)6s, represent social welfare organizations and business leagues, respectively; precisely the type of organization that should tag the legal status of ALEC. Contributions to each type are not tax-deductible.

According to ALEC’s 2010 Form 990, which I analyzed via guidestar.org, the organization claims its charitable exemption by virtue of an education mission. Its sole client base? Your elected state representatives. Its stated beneficiaries? You, the public. Its actual beneficiaries? Ideologically conservative legislators and the businesses that fund them.

Here is the ALEC mission statement:

To advance the Jeffersonian Principles of free markets, limited government, federalism, and individual liberty, through a nonpartisan public-private partnership among America's state legislators, concerned members of the private sector, the federal government, and the general public. To promote these principles by developing policies that ensure the powers of government are derived from, and assigned to, first the People, then the States, and finally the Federal Government. To enlist state legislators from all parties and members of the private sector who share ALEC's mission. To conduct a policy making program that unites members of the public and private sector in a dynamic partnership to support research, policy development, and dissemination activities. To prepare the next generation of political leadership through educational programs that promote the principles of Jeffersonian democracy, which are necessary for a free society.

Long and highfalutin as it is, the key words here are “Jeffersonian Principles,” because if this is merely an educational organization that espouses a theory of governance, that is allowed under the educational clause of the charitable definition. If it is, however, a cover for a conservative, partisan, i.e. Republican lobbying agenda, well, partisan politics are expressly verboten by IRS code.

And of course it is strictly partisan. It is no more purely “Jeffersonian” than Democrats are “Hamiltonian.” And the legislation it produces serves a corporatist and hard-right ideological agenda to the exclusion of everyone else. So, unlike the Boy Scouts, for example, there is no public in the public good, there is only partisan favoritism. In short, ALEC represents a legislative and charitable capture of game-changing proportions. It represents a new frontier in pay-to-play capitalism.

I am far from alone in reaching these conclusions. One commenter at guidestar.org wrote:

After researching ALEC for some weeks, it has become apparent that they are the extreme conservative group behind the voter suppression and anti-collective bargaining legislative passed through some state governing bodies in the last year. Basically it is a "Pay to Play" scheme in which corporate members spend lots of cash for membership and sponsorship positions that give them direct access to sympathetic politicians in state legislature. In many cases, their "model legislation" language has been passed into actual law with little or no change. Of the verified members, Koch Industries has been documented as a corporate member; the Koch brothers, if you remember have spent millions of dollars supporting extreme conservative positions and candidates. It is impossible to get a list of active corporate members and active legislative members. People I know have brought up ALEC with their legislators, only to have them quickly change the subject or try to tie this group to the National Conference of State Legislatures.

The other grounds upon which ALEC should lose its charitable status is that its primary raison d’être is to influence legislation. That it does so by creating legislation represents a new model perhaps, and allows legal nooks and crannies for lawyers to exploit in parsing the definition of lobbying. But f you take a clear-eyed look at what ALEC does, it’s straight-out pay to play lobbying with corporate members calling the shots and legislative members carrying their water.

The ALEC Form 990 alludes to a galling practice by which legislators are paid to attend ALEC’s legislative conferences by what are called “scholarships,” as if your legislators were needy students. It’s just corporations paying them to show up and do their bidding, but ALEC attempts to keep the payments in the shadows by the following logic as stated in its return:

ALEC is the recipient of funds from various outside organizations on behalf of State Legislators. Scholarships are payable, upon approval by the relevant State Chair, to State Legislators to reimburse them for travel expense incurred attending meetings of ALEC. The amounts received and disbursed by ALEC for such purposes are not considered revenue and expenses of ALEC as the State Chair retains the exclusive right to determine the expenditures. The cash held and retained liability are reported in the financial statements of ALEC.

This is just a legal fiction, of course. You can’t erase the need to report expenditures on the basis of some flimsy “State Chair” defense. It’s just a way to hide the names and amounts of money paid to legislative recipients. It is complemented by the $250,000 that ALEC pays to legislators for “childcare” provided during the conference. This figure and a variety of related practices came to light in the New York Times article “Nonprofit Acts as a Stealth Business Lobbyist.” But we’ll have to see what the IRS does with all of this. Because it would represent an attack on exclusively Republican, corporate, interests, a powerful, shrill, and exceedingly well-funded opposition will oppose any actions the agency takes. According to the Times, ALEC maintains that its actions are excluded from the definition of lobbying by virtue of its nonpartisan nature. There is no measure, however, by which the work can be called nonpartisan. The first giveaway might be that virtually no Democrats are included amongst the hundreds of state legislators served and paid by the organization. According to the article, “all but one of the 104 leadership positions were filled by Republicans.” And all of ALECs model laws are 100 percent conservative.

While the ALEC Form 990 lists only lawmakers on its board of directors, guidestar.org lists its corporate leaders, including GlaxoSmithKling, Intuit, Johnson & Johnson, UPS, and ATT, to name but few. These are the companies that sell you diapers and cell phones, and sponsor voter suppression laws and the now infamous Stand Your Ground laws. Why Johnson & Johnson would want to expand your right to shoot first and ask questions later may seem a little mystifying at first, but the truth is it represents just one element of a unified corporate-right front—a dangerous front—a front consumers need to reject in their buying habits regardless of what the IRS decides to do.

In the case of Stand Your Ground laws, ALEC has abolished the legislative task force, the Public Safety and Elections Task Force, that produced the model laws. This should indicate that they themselves realized how far over the line they had transgressed. At this point I can only speculate as to the origins of the Stand Your Ground model within the organization, but at any rate we can be fairly confident that it represented at least an informal alignment of the NRA and ALEC, spearheaded through ideological players like the Koch Brothers or legislators who carry water for the NRA.

And how does ALEC produce the sausage? Amazingly, according to their tax form, they spend just $17,000 on lawyers as a program expense, the same amount that they spend on plaques and gewgaws. That means that the law-drafting muscle—the language—is supplied exclusively by the corporate members, because we all know that elected officials rarely draft their own bills. And those corporate members are exceedingly forthright with their contributions because the organization spends just .047 percent of its annual revenue on fundraising costs. That is off-the-scale low. While legislators must spend hours a week, every week, fundraising from corporate “partners” to fill their coffers, the leadership of ALEC never even has to pick up the phone and ask their corporate partners for dough if you can believe their tax return. But of course you can’t.

It’s all a fiction, an elaborate fiction, and a very well-executed one. If the IRS challenges the charitable status of the organization, it will surely end up in court, and may well go to the Supreme Court, where yet another bastion of a free and voluntary society may be decimated in the thicket of so-called free market ideology. There's nothing free about it. It’s rigged. It’s tilt. It’s a good reason not to trust your state legislature. And that these corporate donors receive charitable tax deductions is primarily a symbolic insult, because the fact is they could write off membership in a 501(c)6 as a business expense anyway.

The now reasonably well-documented operations of ALEC give the impression that state legislators are no more than errand boys and girls for their corporate overlords. It represents an almost public acknowledgment that the game is rigged. If it isn’t corruption prima facie, it’s a fundamental corruption of the legislative process and the tradition of nonpartisan charitable autonomy this nation holds dear.

But we should defend real charities, charities that follow the rules, educate the pubic regardless of political persuasion, free of self-interest, and with a real deference to the tradition of nonpartisanship in the nonprofit sector by throwing these corporate interlopers out of the temple. And we should yank our legislators away from the trough, and crutch, and the anti-democratic impulse, that ALEC represents.