Long entry today, as there's lots of news both on GOP contracting corruption and GOP attacks on the environment. The conservative coalition is on the brink of implosion, with businesses and the Leadership lustily chasing pork, putting the ideologues in a tricky position.
At least both factions can agree on ruining environmental protections.
Long analysis below the fold, and be sure to check out my home, Slingshot.org.
FEMA, Hurricanes & Civil Defense.
Even as the conservative coalition frays over the enormous deficits racked up by their government, the GOP and its lobbyists are salivating at the thought of exploiting Rita and Katrina to push through more corporate welfare.
Dissension in the Ranks. The Republican Study Committee seems perilously close to declaring war on its House Leaders. Republican Rep. Jeff Flake says this in today's WSJ: "When we refuse, in the aftermath of Katrina and Rita, to consider postponing a universal prescription drug benefit that we could ill-afford prior to the devastation, and reject out of hand a national consensus that we reopen the infamous Highway Bill and finance the rebuilding of the bridge over Lake Pontchartrain in Louisiana by canceling the Bridge to Nowhere in Alaska, we can hardly blame the voters for questioning our fiscal bona fides." Business lobbyists have vowed to fight any delay in the Medicare drug benefit and the "Bridge to Nowhere" is a Republican earmark.
The Contracting Orgy. Jeffrey Birnbaum reports in today's Washington Post on corporate lobbyists' solidifying agenda. "[O]il lobbyists, like so many others, are using the storms as an excuse to win long-sought legislation, even when their plans relate only tangentially to the hurricanes." "A lot of lobbyists' pleas dressed in hurricane clothing are for things that Congress has rejected for years. John M. Engler, president of the National Association of Manufacturers, has called for the opening of oil and gas drilling on the ocean's Outer Continental Shelf as a way to increase the availability of energy. Why now? Because Katrina is a reminder of how fragile the country's energy infrastructure is, he said." Birnbaum covers a lot of ground, and the entire article is worth reading.
MarketWatch's Robert Schroeder reports that DoJ and the Federal Trade Commission are expediting anti-trust review of mergers so that businesses "can move quickly to respond in areas affected by Hurricanes Katrina and Rita." The DoJ press release offers a speculative rationale for its change: "Joint ventures and other collaborative arrangements may be helpful in rebuilding after the devastation caused by the hurricanes, and the Antitrust Division is committed to helping to foster the recovery efforts." The 5 day expedited review, shortened from the standard 90 day, is "for use solely for post-Hurricane relief efforts and may be invoked at the option of the requestor in lieu of the agencies' standard procedures."
In an important article that I missed yesterday, Dana Milbank reports on the "Katrina Reconstruction Summit:" "As fiscal hawks surrendered, would-be government contractors were meeting in the Hart Senate Office Building to figure out how to get a share of the money. A "Katrina Reconstruction Summit," hosted by Sen. Mel Martinez (R-Fla.) and sponsored by Halliburton, among others, brought some 200 lobbyists, corporate representatives and government staffers to a room overlooking the Capitol for a five-hour conference that included time for a "networking break" and advice on "opportunities for private sector involvement." Senator Frist sent his budget director, Bill Hoagland; the Small Business Administration's Herbert Mitchell was another prominent participant.
According to Equity International's globalsecurity.biz page on the Summit, "confirmed participants include top executives from KBR, McKenna Long & Aldridge LLP, Lockheed Martin, General Dynamics, Northrop Grumman, L3-Titan, IBM, DynCorp, Accenture, Deloitte, Clark Construction Group, 3M, CACI, Unisys, Lucent, and Parsons, and many government officials and diplomats." The agenda is here. Equity International "has lived on natural and human-provoked disasters since 1996 and has made it a lucrative business."
Senator Levin criticized CACI's involvement in Abu Ghraib yesterday.
Jonathan Weisman reports in today's Post on criticism from Sens. Tom Coburn and Barack Obama (press release) of a $256 million FEMA contract with Carnival Cruise Lines. Carnival is charging "four times the amount a vacation cruise passenger would have to pay," according to Coburn and Obama. Meanwhile, reports Weisman, Carnival "paid just $3 million in income tax benefits on $1.9 billion in pretax income last year," as it's incorporated in Panama.
Environmental Destruction. It looks like environmental protections will bear the brunt of the industry/GOP Katrina assaults. Felicity Barringer in the NYT interviewed Interior Secretary Gale Norton, who doesn't seem to have any concerns about increased oil drilling on public lands. Without endorsing any specific proposals, Norton claimed that "the vulnerability of having all the energy supplies and refining and processing capacity in one geographic area reinforces the idea that we need diversity of supply." She's in the midst of an administration directed review of National Park regulations, which will certainly weaken protections for park users. The House is beginning a rewrite of the Endangered Species Act tomorrow, and Norton has no objections to either the contemplated weakening of "critical habitat" protections or increased compensation to property owners who have their development rights limited by regulatory action.
Chris Baltimore of Reuters lays out the specifics of the assault on environmental protections. Again, Richard Pombo's House Resources Committee wants to open up the Florida coast to oil drilling, subsidize oil shale development, and sell off national parks to oil companies. Joe Barton's House Energy and Commerce Committee is focusing on rolling back "New Source Review" rules, which require polluters to incorporate cleaner technology when they expand power plants. Frank O'Donnell of Clean Air Watch said: "It's clear that there's a coordinated effort between the White House and Congress to put key environmental protections on the chopping block." Elliot Spitzer is leading a legal battle against weaker NSR rules already embraced by the EPA, a battle Barton hopes to settle with legislation.
The Wall Street Journal editorial board argues that the House agenda doesn't go far enough: "These are good first steps, but at some point the political class is going to have to find the backbone to ease the rules that it has imposed and that are creating today's energy shortages." It's referring, of course, to the "Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Oil Pollution Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act."
Meanwhile, Senate Democrats are pushing for an investigation of gas price gouging, arguing that the Federal Trade Commission can't be trusted to full investigate allegations. Maria Cantwell, Byron Dorgan, John Kerry, Frank Lautenberg, Barbara Boxer, Bill Nelson, and Jay Rockefeller all signed a letter to Ted Stevens arguing that claims of gouging by triple-A merited a serious investigation. Dorgan: "The same folks who today defend high gasoline prices as the product of a free market said exactly the same thing about energy prices in the West when we now know ... Enron was manipulating the market at full throttle and reaping billions in profits."
Katrina Investigation. It's hardly worth commenting on at this point, but former FEMA head Michael Brown appeared before the Republican-led Congressional "investigation" into the failed response to Katrina. Brown blamed both the Democrats in Louisiana and the White House for failing to heed his warnings. The Republicans and the few Democrats who attended ripped into Brown for his obvious incompetence.
Insurance Imbroglio. Marketwatch's Alistair Barr has an informative article on the internal dispute between insurance companies and the reinsurers that back many of their policies. Given the magnitude of the season's hurricane damages, it's likely that reinsurers will foot a big portion of the industry's bills. Accordingly, they are pressuring original insurers to fight claimants to the bone, threatening litigation if the insurers cover water damage.
USA Today reports on the massive mold problems that now face Katrina victims. Many homes that survived the immediate effects of the hurricane will succumb to mold, and insurers will surely attempt to avoid paying out.
The Hatrick.
Yesterday, the allegations of Frist's insider trading dominated news coverage; today it's two of the byzantine scandals embroiling Delay. I would ask "tomorrow the White House?," but it's pretty clear that Delay will trailblaze for the next few days. Indictments are looming, and an Abramoff business partner is implicated in murder charges.
Travis County Prosecutor Ronnie Earle is closing out his fourth grand jury. The AP reports that one of its final acts may be indicting Tom Delay on criminal conspiracy charges related to TRMPAC and Texas Association of Business charges.
Delay associate Jack Abramoff's troubles deepened yesterday with the arrest on murder charges of three people who received $250,000 from an Abramoff business partner. Adam Kidan, the business partner, was a College Republican compatriot of Abramoff in Washington. Ohio Republican Bob Ney said a lot of things he surely regrets about Kidan's character.
On the Frist score, Reuters' Thomas Ferraro analyzes the political implications of Frist's insider trading scandal. Conclusion: Previously dim hopes, now virtually black.
Roll Call's Mark Preston and Paul Kane report that Republican senators, including many likely 2008 primary opponents, have rallied around Frist. Democrats are "waiting to see if the Securities and Exchange Commission or the U.S. attorney for the Southern District of New York unearths any illegal activity during the course of their investigations." The Hill reports that Frist held a closed-door luncheon to reassure his Party colleagues.
A Roll Call editorial calls for reform of Senate ethics regulations: "What's called for here is major reform of the ethics rules on Senators' financial holdings -- either to make blind trusts truly blind, or (arguably better) to make Senators' holdings utterly transparent."
Business News
Vioxx. The second major Vioxx trial is under way, and the evidence coming to light is damning. The AP reports that Merck failed to inform prescribing doctors that two studies indicated elevated risk of death for Alzheimers patients taking Vioxx. The WSJ has more details, including the fact that the FDA determined the two studies' results weren't statistically significant.
Taser. The SEC has upgraded its investigation of Taser International into a formal inquiry, with subpoena powers. Taser is being investigated both for suspicious financial dealings and for safety concerns about stun guns. The formal SEC inquiry opens the door to a DoJ criminal investigation of the safety claims.
State Tax Credits. The U.S. Supreme Court has agreed to hear a case on the constitutionality of state tax incentives for businesses. The Sixth Circuit has a conflict, with a Michigan court ruling the incentives are constitutionally sound and an Ohio court deeming them a violation of exclusive federal control over insterstate commerce. The case is interesting primarily because it features business associations, which are generally quite fond of exclusive federal jurisdiction over regulatory issues, advancing the opposite position. There's no hypocrisy when the bottom line is at stake.