Democrats Warn Bank Tax Is Coming, "Too Big To Fail"

Max Baucus: A Bank Tax Is Coming


It was a short hallway conversation but spoke volumes about the dilemma facing Democrats, hungry for new revenues after emptying the cupboard on health care reform.

“I don’t think there’s much doubt that there will be a bank tax,” Senate Finance Committee Chairman Max Baucus told POLITICO. And more than ever, the Montana Democrat signaled that Congress will also crack down on wealthy hedge fund and private equity partners who shelter their income as capital gains — taxed at half the top 35 percent rate.

Three times in recent years, the House has voted to rein in the so-called carried interest provision — only to meet Senate resistance. That’s changing with the pressure to find revenues to pay for other priorities such as a $35 billion measure extending popular tax provisions for businesses and families.

“I’ve asked my staff to look at alternatives ... Carried interest will probably be part of the offsets,” said Baucus. “We were thinking of putting it on later as part of tax reform. But we’re here; we’re here now.”

Wealthy Democratic donors are sure to scream; Baucus concedes he could face opposition from his own party moderates. But isn’t the chairman himself the “very soul of the moderate Democrat?” a reporter asks. “I’m a ‘Do-the-Right-Thing’ Democrat,” Baucus grinned.

Doing the right thing isn’t easy in today’s tax-writing world — whipsawed by record deficits, new “pay-go” budget rules, restless voters and a legacy of Bush-era tax breaks due to expire in December. Even the giant financial reform bill, facing its first Senate test Monday night, has potential revenue problems. And Baucus was sorely frustrated last December, when the Senate let the estate tax expire — thereby costing Treasury billions.

At least three major tax-related battles are taking shape in the next few months:

First and most immediate is how to pay for the long-delayed extenders bill, which Democrats want to complete by Memorial Day and which includes a must-pass provision authorizing long-term unemployment benefits past the November elections. Health care picked clean most of the planned revenue offsets in the initial bills, leaving a $35 billion hole and carried interest — worth $24.6 billion over 10 years — standing alone in this game of musical chair offsets.

Second — and fast closing — is President Barack Obama’s proposed bank tax. Baucus wants to keep the bank levy separate from the current debate over financial reform, thereby having the chance to claim the tax revenues as an offset. But the Congressional Budget Office is raising red flags that the Senate reform package will be $17 billion in the red if Democrats drop a $50 billion industry-financed “orderly liquidation fund” opposed by Republicans.

Third, but scarcely least, is this summer’s battle over Bush-era income tax cuts due to expire at the end of this year. The Senate Budget Committee last week approved a five-year plan that assumes the most popular middle-class tax breaks will be made permanent. House Democrats say some extension could be a powerful engine for a revenue bill prior to the elections; part of the mix would be some compromise on the estate tax issue, which splits the party in the Senate.

Each of these fights has its own nuances and competing equities.

The Obama bank tax proposal began as a plan to recoup money already spent by Treasury in the 2008-09 bailouts. The reform bill’s “orderly liquidation fund” is a bet on the future, imposing an assessment on the industry now in case big companies again fail and demand resolution.

Nonetheless, the two issues have become joined in the reform debate. Treasury officials have hinted they would like to sub the bank tax in and the fund out; House Financial Services Committee Chairman Barney Frank (D-Mass.) says Congress should consider a bigger and more permanent bank tax than Treasury has proposed if the liquidation fund is dropped.

“The already strong case for the bank tax gets stronger,” Frank told POLITICO. “I think one possible approach is no pre-existing fund but a bigger and longer-lasting bank tax.”

How the levy is designed depends on how one sees the financial crisis — another reason Baucus is unlikely to move before late May or June, so as to allow time for hearings.

As first proposed in January, the so-called responsibility fee was assumed to raise about $90 billion over 10 years through a 0.15 percent tax on the covered liabilities of the very largest financial institutions. And Treasury has since refined its approach to focus more on risk—measured both by the loans or trading done by banks and how firm the financing is behind them.

In tandem with financial reform the goal is go after what one Treasury official described as “the toxic combination of high levels of risky assets funded by highly unstable sources of funding.”

“We look at both sides of the coin,” he said in an interview. “Someone doing traditional banking — using all deposits to fund even somewhat risky commercial and small-business loans — would be largely shielded from the fee.”

Nonetheless, the mechanics can seem so complicated that this message is lost. And lawmakers are clearly spooked by the notion that the tax could still penalize commercial loans and fall more heavily on banks like Wells Fargo than on Wall Street’s high rollers, Goldman Sachs or Morgan Stanley.

Getting to the bottom of this question means wading into the thicket of Federal Reserve rules governing the weighted risks of commercial loans vs. market activities.

The Fed’s capital experts warn against quick, generalized comparisons, but a Joint Taxation Committee report this month said that “because commercial loans are assigned the highest risk-weight of 100 percent, a tax on risk-based assets could prove a disincentive for an institution to make such loans, including loans to small businesses.”

“There are pluses and minuses,” House Ways and Means Committee Chairman Sander Levin (D-Mich.) told POLITICO. “We’re looking at ways to relate it to risk, but that’s not easy to do because the ‘riskiest’ are commercial loans, and we don’t want to tax those.”

This invites a Ways and Means option based on income and profits. A bank’s taxable income would be first adjusted upward by adding back some portion of the rich bonuses deducted as compensation, then would come a surtax imposed to raise the required funds.

Given the huge profits and bonuses being reported by Wall Street investment banks, this has a clear political appeal. But Treasury would argue that its risk approach is substantively better — in terms of the reform message at home and in partnership with reforms overseas by U.S. allies.

The very different carried interest tax debate has its own nuances — and winners and losers.

At issue is whether income paid to wealthy investment fund managers should be taxed at the 15 percent capital gains rate or the upper income bracket, 35 percent and climbing. Proponents of the current system argue that the managers have a “carried interest” in the capital investments they oversee. Critics say it is ordinary income paid in exchange for the performance of services, and the managers often have very little skin in the capital game.

The House permits some leeway: allowing carried interest to be taxed at the capital gains tax rate to the extent that it reflects a reasonable return on invested capital. And after interviewing different coalitions with a stake in the outcome, Senate Finance staff is now looking at compromises that could address some complaints — but still yield much needed tax revenue.

Hedge fund partners make for an easy political target today, but much of their trading is so short term that it doesn’t qualify for the lower capital gains rate that applies to assets held more than six months.

Private equity, publicly traded partnerships in the energy field and real estate partnerships are often affected more, especially given the strained state of commercial real estate. To win the needed votes, Baucus will have to look at options that ease the transition by perhaps imposing a midpoint rate — between 15 percent and 35 percent — or grandfather in some deals already made before a fixed date.

These deals mean less revenue, so tax writers are also looking at closing a foreign tax credit loophole — estimated to be worth $9.5 billion over 10 years. But the gap is too big to plug without pain.

“There are no easy choices left,” said one person familiar with the search for revenues and focus on carried interest. “No final decisions have been made. We’re about a week away, but I won’t argue, it is a leading candidate.”


Sources: AP, Politico, Youtube

Ethics & Corruption Probes Sure To Hurt Dems In 2010, 2012

US House Ethics Committee expands Charlie Rangel's probe.

Visit msnbc.com for breaking news, world news, and news about the economy

Harvard Law Professor Larry Lessig: The effects of Political Corruption on Voters. In this video Sen. Max Baucus is the focus of a lesson on Political and Public Corruption.





Ethics Probes may saddle Democrats in 2010


The House Ethics Committee Investigation of Rep. Charles Rangel (D-N.Y.) is likely to extend well into 2010, according to sources familiar with the probe, meaning that the fate of the powerful chairman of the Ways and Means Committee could become a major political issue for House Speaker Nancy Pelosi of California and the Democratic leadership during a difficult election year.

The committee’s investigation of Rangel’s personal finances, now 14 months old, has dragged on far longer than both Pelosi and Rangel had hoped. Pelosi predicted in late 2008 that it would be over by the end of that year or early 2009. Now sources familiar with the Rangel probe say the investigation could continue into February or March.

The veteran New York lawmaker is the most prominent — but hardly the only — Democrat facing ethical questions.

Recently, Rep. Bennie Thompson of Mississippi has had to deny allegations that he used his chairmanship of the Homeland Security Committee to help raise campaign contributions.

In addition, the Justice Department is continuing its criminal investigation into Democratic lawmakers’ dealings with the PMA Group, a now-defunct lobbying firm that specialized in winning multimillion-dollar spending earmarks from the Appropriations Committee for its clients.

Rep. Pete Visclosky of Indiana, a senior member of the Appropriations panel, and his former top aide Charles Brimmer were issued subpoenas as part of that investigation earlier this year. The DOJ probe is ongoing, according to multiple sources.

And on the other side of the Capitol, Sen. Max Baucus of Montana faces accusations that he nominated his girlfriend for a U.S. attorney position in the Justice Department, while Sen. Roland Burris of Illinois was recently admonished by the Senate Ethics Committee for failing to fully disclose his contacts with indicted former Illinois Democratic Gov. Rod Blagojevich over an appointment to the Senate seat vacated by now-President Barack Obama.

This wave of ethics problems for Capitol Hill Democrats makes GOP strategists optimistic that they can do to Democrats what was done to Republicans in 2006: paint a picture of a majority party corrupted by its own power.

“Thanks to Nancy Pelosi’s lapses in judgment, the rap sheet on the Democratic-led Congress is getting longer by the day,” said Ken Spain, communications director for the National Republican Congressional Committee. “When the speaker promised to ‘drain the swamp,’ she probably didn’t think she’d be fighting off hypocrisy charges four years later heading into the 2010 elections.”

Democrats, though, downplay the GOP ethics attacks, arguing that party leaders are making sure that improper behavior is promptly investigated and punished. They note that a recently leaked document from the House ethics committee showed that the panel and the Office of Congressional Ethics, an independent watchdog created by Democrats in 2008, are reviewing a broad range of cases against lawmakers. To Democrats, this means the ethics process is working as designed.

They also note that Republicans have their own ethical problems to deal with and shouldn’t be spoiling for a fight on this issue.

Sen. John Ensign of Nevada faces a Senate Ethics Committee investigation — and a possible Justice Department probe — of his handling of an extramarital affair with a former staffer, a controversy that has also ensnared Sen. Tom Coburn of Oklahoma. Rep. Don Young of Alaska was accused by an Alaska businessman of receiving tens of thousands of dollars in improper campaign donations. And Republican appropriators had their own ties to the PMA Group, which means that GOP lawmakers are vulnerable on that front, as well.

“After more than a decade of Republicans’ culture of corruption, they are not used to seeing an ethics committee that does its work without interference from Republican leaders,” said Jennifer Crider, spokeswoman for the Democratic Congressional Campaign Committee. “House Democrats passed the most sweeping ethics and lobbying reforms in history and established an independent outside ethics office.”

It is unclear whether Rangel has been interviewed yet by ethics committee investigators looking into his personal finances, although he did meet with a different subcommittee reviewing Caribbean trips made by five African-American House Democrats in 2007 and 2008. A special investigative subcommittee is trying to determine if those trips were improperly paid for using corporate funds.

The Washington Post reported in October that the ethics committee had interviewed Rangel’s son and a top aide, and House investigators have met with officials in New York City’s housing office. One of the accusations Rangel faces is that he improperly controlled multiple rent-stabilized apartments in a Harlem luxury apartment building.

A Rangel spokesman said the New York Democrat “remains focused on the issues that matter most to his constituents: enacting health insurance reform and advancing policies that will help our economy recover and create jobs. He looks forward to the conclusion of the review he himself requested.”

The House ethics committee spent more than eight months searching for a new staff director following the death of its chairwoman, Rep. Stephanie Tubbs Jones (D-Ind.), in August 2008, a delay that hampered the initial phases of the Rangel probe.

The committee has also been forced to expand the scope of the investigation twice in response to new allegations against Rangel, including once in October after he submitted amended financial-disclosure reports showing hundreds of thousands of dollars in previously unreported income and assets.

Rangel has also been accused of using his congressional office to help raise funds for the Charles B. Rangel Center for Public Service at the City College of New York, as well as helping a million-dollar donor to that center retain a lucrative tax break. Rangel has denied all allegations of wrongdoing.

With editorial writers across the country calling for Rangel’s head, Republican leaders have tried on several occasions to push through a resolution calling for Rangel to be stripped of the Ways and Means gavel.

But Pelosi and other Democratic leaders — under pressure from the Congressional Black Caucus — have stuck with Rangel, leaving him atop the panel despite the ethics controversy surrounding him.

The Republicans were also publicly embarrassed when Rep. John Carter of Texas, who offered the Rangel removal resolution, admitted that he had failed to disclose more than $300,000 in stock profits on his annual reports to Congress. Since that time, Carter and the GOP leadership have dropped their efforts to oust Rangel.





Max Baucus gave girlfriend $14K raise



Sen. Max Baucus (D-Mont.), chairman of the powerful Senate Finance Committee, gave a nearly $14,000 pay raise to a female staffer in 2008, at the time he was becoming romantically involved with her, and later that year took her on a taxpayer-funded trip to Southeast Asia and the Middle East, though foreign policy was not her specialty.

Late last Friday, Baucus acknowledged his relationship with Melodee Hanes, whom he nominated for the job of U.S. attorney in Montana, after it was first reported on the website MainJustice.com. But he said that Hanes withdrew from consideration for the job when the relationship became more serious. The following day, Baucus dismissed calls for an ethics investigation, saying, “I went out of my way to be up and up.”

Since his announcement, more details of the relationship have emerged, raising questions about a workplace romance between a boss and employee that Baucus tried to keep quiet, and also contradicting his explanation for why Hanes’s nomination was withdrawn.

Jodi Rave, a former reporter for the Missoulian revealed over the weekend that the paper informed Baucus in March that it was poised to publish a story about Hanes’s relationship with the senator and the fact that he had nominated her for the U.S. attorney job.

The next day, Hanes withdrew from consideration. According to the Missoulian, Baucus’s office never acknowledged a relationship between the two, and the paper did not run a story.

Baucus’s office said yesterday that while Baucus was aware of Rave’s questions, “there were a number of factors that went into Ms. Hanes’s decision to withdraw” from consideration for the U.S. attorney post, including that the couple’s relationship was “changing.”

“These discussions took place before, though around the same time as, the reporter’s inquiry,” Baucus’ office said in a statement. “This, coupled with the fact that they wanted to live together in Washington, led to her withdrawal.”

Baucus’ office also defended the salary boost for Hanes, saying it was in line with what his other staffers were receiving at the time, and argued that she played an important role on the international trip she took with Baucus.

Baucus separated from his now-ex-wife, Wanda, in March 2008 and moved out of their home. Hanes separated from her husband in April 2008 and moved out in early June. Hanes was divorced from her husband last December, and Baucus was divorced in April 2009. They are now living together on Capitol Hill and began dating in the summer of 2008. Hanes and other staff received their raises in this time period, according to public documents that show payroll breakdowns in six-month increments.

Baucus insists that Hanes was well-qualified for the prosecutor position, and his office released a lengthy résumé detailing her expertise as a prosecutor and in private practice.

Unlike many private corporations, there are no Congressional Rules barring a lawmaker from having a romantic liaison with an employee. In several cases, members have married staffers. For instance, Rep. Steve LaTourette (R-Ohio) became involved with his wife when she was still his chief of staff. Former Rep. David Bonior (D-Mich.) first hired his wife, Judy, as a staffer and later married her. Former Rep. Newt Gingrich (R-Ga.) became involved with a House staffer when he was speaker of the House. He later divorced his second wife and married the staffer.

Baucus himself was sued by his former chief of staff, Christine Niedermeier, after he fired her, but the case was thrown out on a technicality. She claimed the senator made unwanted sexual advances, but Baucus vehemently denied the allegation.

Hanes, who worked on Baucus’s staff as his state director and senior counsel, accompanied him on a taxpayer-funded congressional delegation in late 2008 with other members of the senator’s staff, a trip first reported by The Hill. The Baucus group traveled to Vietnam and the United Arab Emirates, at a cost to taxpayers of more than $14,000 per person

On Friday, Baucus’ office said that Hanes traveled in 2007 to Cuba on official travel, months before she and Baucus became romantically involved. The senator’s office said the Cuba trip was meant to promote trade issues between Montana and Cuba. The $1,105 cost of Hanes’ trip was paid for by the Finance Committee. Baucus was not part of the delegation, which also included representatives from Montana agricultural associations.

The two trips constituted Haynes’s only official foreign travel during her nearly six years on Baucus’s payroll.

Baucus’s office said it was appropriate for Hanes to accompany the senator and other aides to the Montana Democrat on the trip to Vietnam and the United Arab Emirates, even though the couple had begun a romantic relationship. The office said previous state directors had also gone on official overseas trips, and that the trip resulted in increased collaboration between universities in Montana and Vietnam. And it released a Jan. 2009 e-mail from an official at the University of Montana praising the senator for the trip, saying it yielded tangible results for the school in boosting educational and cultural exchanges with Asian colleges.

Baucus’s office also denies giving Hanes any preferential treatment while she was a paid member of his Senate staff. A Baucus spokesman downplayed the salary hike Hanes received, saying it was in line with what other aides to the senator received during the same period.

Around the time when her relationship with Baucus reportedly “intensified” in the summer of 2008, Hanes’s salary jumped $13,687, according to public documents covering the April 1-Sept. 30, 2008, period, to among the highest on the senator’s payroll.

In a statement to POLITICO, Baucus’s office argued that “virtually our entire staff” saw their salaries rise during the period, saying the raise was on a par with the legislative director’s and less than the chief of staff’s.

“In fact, during that period, Ms. Hanes’s salary increased by the exact same amount as our legislative director and less than our chief of staff,” said a statement from a Baucus spokesman.

Hanes’s salary did return to a lower level in the following six-month period, Senate records show. According to Baucus’s office, she left the staff in May and joined the Justice Department’s Office of Juvenile Justice and Delinquency Prevention, where she currently works as acting deputy administrator for policy.




Easley aide to appear before elections board



An aide to former Gov. Mike Easley is scheduled to appear before the State Board of Elections next week.

Ruffin Poole, who served as Easley's lawyer during the governor's two terms in office, will attend a Dec. 17 hearing, elections board Executive Director Gary Bartlett said Wednesday.

The board subpoenaed Poole in October to testify during its hearing into alleged campaign finance violations by Easley and his campaign, but Poole convinced a Superior Court judge to quash the subpoena. He argued that his testimony could violate the legally protected conversations he had with Easley as his attorney.

The state Court of Appeals overturned the judge's decision, ruling that Poole should comply with the subpoena because he was a government lawyer and not Easley's personal attorney.

The court's ruling came after the elections board turned the findings of its five-day hearing over to Wake County prosecutors, saying evidence from the hearing "suggests" criminal violations by Easley and possibly others.

The board also ordered Easley's campaign to forfeit $60,000 and fined the campaign another $40,000 for violations of campaign finance law related to unreported flights that major donors provided to Easley aboard their private planes.

Elections board Chairman Larry Leake said at the time that the hearing would be held open to allow members to hear from Poole.





NC Senator Tony Rand Accused of Insider Trading


The former president of a publicly traded Raleigh company is accusing NC State Sen. Tony Rand, one of the state's most powerful lawmakers, of insider trading and other illegal actions.

In a complaint filed with the U.S. Department of Labor, Paul Feldman, who claims he was illegally fired as president of Law Enforcement Associates in August, alleges that Rand had a scheme to profit from manipulating the value of LEA stock, Alan Wolf reports on the .biz blog.

Rand, the Fayetteville Democrat who plans to step down from the state Senate this month, has been chairman of LEA's board since 2003. The company, which makes security and surveillance equipment, was spun off in 2001 from Sirchie Finger Print Laboratories, a Franklin County company started by former state Sen. John Carrington.

In his complaint, Feldman also alleges that Rand told another LEA executive that he previously had traded the stock of Raleigh-based First Citizens Bank based on inside information he had gotten from former president Frank Holding. Rand said that he "planned to do the same to LEA stock," Feldman wrote.

Rand called the charges "insane" and "hogwash."

"He's a disgruntled ex-employee," Rand said Wednesday in a phone interview with Rob Christensen. "I'm embarrassed that Frank Holding has even been mentioned in this mess. But I guess that is part of it, when you are in business and in politics. People think you are fair game and maybe you are."

—————

LEA disclosed Feldman's allegations, including his Nov. 17 letter to the Labor Department, in a filing with the Securities and Exchange Commission on Tuesday.

Feldman also alleges that Rand and other LEA board members violated SEC rules by falsifying minutes of board meetings and omitting information in SEC filings. He also contends that LEA sold video equipment and other products through a sister company to police in the Dominican Republic. That violated federal export laws, Feldman alleges.

Feldman wrote that he has been interviewed by special agents for the FBI and IRS related to his allegations.

Rand said he has not been contacted by any law enforcement officials. "This offends me," he added. "There's no truth to any of this."

A spokeswoman for First Citizens wasn't immediately available for comment.

LEA officials responded in its SEC filing on Tuesday that Feldman's "claims are groundless, and are an attempt by a disgruntled former executive to seek retribution from the company."

LEA "does not believe the allegations ... have any merit" and plans to "vigorously defend against these actions."

The company also wrote that Feldman was removed as CEO in August for "insubordination" and "in the face of poor performance."

Feldman claims that Rand and other LEA board members fired him in late August when he was hospitalized for two days because of a "mini-stroke" and unable to attend the meeting to defend himself. Feldman couldn't be reached for further comment.

Feldman is seeking reinstatement as CEO and president of LEA, or economic damages for lost compensation, and "damages to his career, reputation and earning capacity." Feldman had been LEA's top executive for 19 years.

The company has struggled to boost sales of its products, including under-car inspection systems, explosive detection kits and GPS tracking equipment, to law enforcement agencies, nuclear power plants, the military and other customers.

LEA moved its headquarters to Raleigh from Youngsville last year, and has been cutting costs and jobs. It now employs about 25. Chief financial officer Paul Briggs couldn't be reached for comment.

LEA reported last month that net sales fell to $1.9 million during the third quarter, down 21 percent from the same quarter last year. LEA's net loss was $99,000, compared to net income of $96,000 last year.

Its stock now trades for pennies. In 2004 and 2005, when Feldman alleges the insider-trading scheme occurred, LEA's shares surged above $4. At its peak, in January 2005, the stock closed as high as $10.86.

On Wednesday, the shares rose 4 cents to 15 cents.





Federal Grand jury investigating Charlotte-Mecklenburg County DSS



A grand jury is investigating the Mecklenburg County Department of Social Services, which has faced scrutiny over accounting practices and spending since early this year, two county commissioners said Monday.

Commissioner George Dunlap said the Federal Grand Jury has been looking into whether crimes were committed by employees.

Commissioner Bill James said board members were told last month that a federal grand jury is investigating. He refused further comment on the topic, saying commissioners were instructed by a county attorney not to discuss specifics.

The county ordered an audit of the Giving Tree after a DSS employee raised questions about spending at the Christmas charity for needy children. The county discovered checks written out to a county employee who volunteered with the program, as well as money issued to the sister of another employee.

County spokesman Danny Diehl said officials cannot confirm whether a federal grand jury is involved, but said the county "is cooperating with law enforcement to complete the investigation."

The county has asked Charlotte-Mecklenburg police to investigate. A police spokesperson on Monday said their work is ongoing.

Other commissioners reached Monday would not comment on work by authorities. "I want the investigation to have the best possible outcome, said board Chair Jennifer Roberts. "So I am unable to discuss it in the interest of not impeding the work of law enforcement."

In the meantime, James and fellow Republican commissioners Karen Bentley and Neil Cooksey want the county board to meet next week to learn more about ongoing probes.

"There are facts we don't have," James said. "I am just concerned there is stuff even senior management doesn't know."

Diehl said the county will respond to any questions the board has about the DSS audits. "The board has received reports and been briefed on all aspects of the DSS audits that are available to the county manager and staff."

The developments follow Observer stories on Sunday detailing a 74-page memo from a former county employee who headed the Giving Tree. Cindy Brady, who retired from the county in August, wrote she was never given a chance to talk at length about how the charity worked, despite requests to do so.

Brady said the county advanced her as much as $198,000 since 2005 with the approval of her supervisors. Brady said she spent the money on gifts for needy children, but says she did not collect all of her receipts, and some were handwritten or lost.

County leaders say they can account for how about $162,000 was spent by the Giving Tree last year.

But audit reports acknowledge numerous problems with receipts and other documents to track expenses and cited inadequate oversight and controls of the program by management.

The county has announced a number of changes in response to the charity audit and reviews of other DSS spending, including putting department finances under control of the county finance office and re-training DSS employees in financial practices and procedures.

The agency employs about 1,200, with a current annual budget of $176 million.

Brady's memo, dated July 29 and sent to a human resources manager, criticized county investigators for not interviewing her during the audit investigation. The county's former Internal Audit Director Cornita Spears said she first read the memo last month, and it led her to revise her earlier report to include about $33,000 Brady said she returned to the county earlier this year.

County Manager Harry Jones suspended Spears last month over the error.

Why James wants meeting

James cited the Observer story in explaining his reasons for calling the new discussions on DSS. He said he wants to give disgruntled employees a venue to air grievances. For months, James said, commissioners have been deluged with anonymous complaint letters from people who only identify themselves as current and former agency workers.

Some apparently won't divulge their names because they fear retaliation from superiors, James said.

The proposal requests that the board discuss the DSS issues on Dec. 17, with portions of the meeting to be held behind closed doors. It asks that DSS Director Mary Wilson appear to the meeting, and that other department employees be made available.

It also requests that former Giving Tree employees be invited to talk, including former county general manager Janice Allen Jackson, who briefly led DSS on an interim basis until Wilson was hired last year.

Neither Jackson nor Brady could be reached for comment Monday.

The proposal also wants Jones to provide in open session a detailed list of gifts bought with Giving Tree money and information on all items from the charity now in county inventory.

It also asks for copies of all internal memos produced by internal audit and county management involving the Giving Tree.

The county publicly released a three-page report in June and a follow-up report last month. The Observer has requested a longer report by Spears multiple times since July, but the county has said personnel laws bar them from releasing the document.

In order to hold the Dec. 17 meeting, at least five commissioners would have to agree. At least two of the six Democrats would have to sign on.

Roberts, Dunlap and Vilma Leake said they want to hear more about what the commissioners are trying to accomplish in holding the meeting before they can decide whether to support it. However, Roberts questioned whether meeting in closed session was the best approach, and said she is "distressed" that the board Republicans did not talk to her before putting the item on next week's agenda.

Dumont Clarke said he's inclined "to be as transparent and public as possible about this issue and do as little as possible behind closed doors."

Commissioners Harold Cogdell and Dan Murrey did not respond to requests for comments.

Cooksey said his constituents are demanding the board take a "more active role in getting to the bottom of this."

Cooksey disagreed with commissioners who have said they county is spending too much time on the issue and should not look into anonymous complaints.

"When you have issues swirling around, you can't ignore it," Cooksey said. "We have an obligation to see if these allegations have any truth to them or not."



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Sources: Politico, MSNBC, WRAL, McClatchy Newspapers, Under The Dome, News & Observer, NY Post, Wikipedia, Youtube, Google Maps

Political Corruption: Larry Lessig Exposes America's Corrupt Political Process

Harvard Law Professor Lawrence Lessig makes a sweeping indictment of the relationship between special interest groups, their lobbyists, and Capitol Hill politicians. "Members, staffers and bureaucrats increasingly have a common business model in their head as they serve in Washington," says Lessig. "The business model is focused on their life after government - life as Lobbyists."






Professor Larry Lessig introduces the Safra lecture series with a discussion on institutional corruption.

He explores the prevalence of this form of corruption in fields ranging from politics to medicine to journalism, and describes his plan to study and contain this problem. - Safra Foundation Center for Ethics at Harvard University






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Sources: Wikipedia, Harvard Law School, ForaTV, Youtube, Google Maps

Pelosi's Robust Public Option Lacks Enough Votes...Trigger Or "Opt Out" Compromise Only Alternatives

(Political Pundits discuss Pelosi's Public Option)





Pelosi lacks votes for most sweeping Public Option

Speaker Nancy Pelosi counted votes Thursday night and determined she could not pass a “robust public option” — the most aggressive of the three forms of a public option House Democrats have been considering as part of a national overhaul of health care.

The California Democrat's count — coupled with a significant turn of events Thursday during a private White House meeting — points to an increasingly likely compromise for a “trigger” option for a government plan.

Administration officials have been telling POLITICO for weeks now that this is the most likely compromise because it can probably satisfy liberals — albeit only reluctantly and after many vent frustration and some even threaten to walk away from the bill.

This would clear the way for backers to sneak a limited public option through the Senate by attracting moderate Democrats and then to win President Barack Obama's signature.

Speaking to reporters Friday after a meeting of House Democrats, Pelosi said “no decision of that kind has been made" on which public option to pursue. "By no means is the count complete or has the decision been made," she said.

"We had a very congenial - is that the word for a caucus? - a very lively, friendly caucus this morning where we are continuing to count the votes on this,” Pelosi said. “A robust public option is the preferred way to go because it saves the most money - $110 billion. It's not the only way to go, and at the end of the day we will have a public option in this legislation to keep the insurance companies honest and to provide real competition. Again, it's good, better, best. We're having that debate."

Obama told Senate Democratic leadership at the White House Thursday evening that his preference is for the trigger championed by Sen. Olympia Snowe (R-Maine) — a plan that would allow a public plan to kick in if private insurers don’t expand coverage fast enough, a top administration official told POLITICO. It’s also sign Obama is interested in maintaining a sense of bipartisanship around the health reform plan.

At that meeting, Obama did not sign on to a plan being floated by Senate Majority Leader Harry Reid (D-Nev.) to include a different variation of the public option in the Senate bill — a plan that would create a national public plan but allow states to “opt out.” Reid now believes he can get 60 votes to bring a bill with that plan to the floor by breaking an expected GOP filibuster — and then secure the 51 votes needed to pass it.

But Pelosi’s vote-counting didn’t go as well in the House. There has been a flurry of rumors that a robust government option remains viable. But top House Democrats privately concede that is wishful thinking that ignores the power of moderate Democrats in this debate.

The House is now likely to include one of the two weaker versions in the bill that will be considered on the floor as Obama’s historic health reform plan chugs toward passage — possibly a version that would set rates for the public plan by allowing doctors and hospitals to negotiate them with Medicare.


Nadeam Elshami, deputy communications director and senior adviser to the speaker, said: "Speculation that a final decision has been made about the public option are not accurate. We continue to work with all the members of the caucus to build consensus."

A House Democratic official said: "The leadership did not tell progressives last night that the robust public option is off the table. The votes are still being counted."

The vote count is a disappointment to liberal members in the House, after two days in which Pelosi seemed increasingly confident she could secure the votes needed for the most liberal option. She had her top lieutenants polling members and even enlisted progressive leaders in trying to corral more support.

“Votes aren’t there,” a top official said. “The progressives are always more optimistic than reality.”

But the final outcome could be helpful to the crucial members of her caucus from conservative-leaning districts, who opposed the most liberal version of the public option, one tied to Medicare rates.

The speaker has proved herself a reliable vote counter, and she wants to release a bill that she knows can get at least 218 votes. Aides say the count was somewhat of a surprise but not completely.

The speaker plans to roll out the House bill with a big ceremony on the West Front of the Capitol.

That was planned for Tuesday or Wednesday and may still happen then. But aides say that disappointing first tally could delay the timeline a bit as they scramble to finalize the bill that will be considered on the House floor.

Sources: Politico

Pelosi Wants A Real Public Option Choice In Health Care Reform Bill

(Pelosi: Bill will have a Public Option. NBC’s Andrea Mitchell talks with House Speaker Nancy Pelosi about the inclusion of a public option in the House health care reform bill. Watch the entire interview on Friday.)

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(Measuring the worth of a Public Option. House Majority Leader Rep. Steny Hoyer discusses whether a public option is a necessity that is worth the cost in political capital.)

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(Cloture could save the Public Option)

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Senate bill may have Public Insurance plan


Democratic leaders in Congress pressed their rank-and-file to allow the government to sell health insurance in competition with private industry as they struggled to pull together a comprehensive health care bill that meets President Barack Obama's goals.

The Senate has long been seen as opposed to the government selling insurance in competition with insurers, but now senior Senate Democrats and White House officials are strongly considering including such a measure, officials say. The provision would permit individual states to drop out of the system, a design that could make it more palatable to moderates who have opposed the "Public Option."

Liberals in Congress view a public option as a critical ingredient to an overhaul of the nation's health care system, and Obama has said frequently he favors it. But he has also made clear it is not essential to the legislation he seeks, a gesture to Democratic moderates who have opposed it.

Sens. Ben Nelson, D-Neb., and Kent Conrad, D-N.D., said in separate interviews that they had been told the plan was drawing interest in private negotiations led by Senate Majority Leader Harry Reid, D-Nev., who is merging health bills passed by two separate committees into a final package to bring to the floor.

"What I'm hearing is that this is the direction of the conversation," said Conrad, who supports an alternative approach under which nonprofit co-ops would compete with private industry.

Nelson said he'd also heard the plan was drawing favor, adding he thought that was unfortunate.

The White House declined to comment. Reid's office did likewise, and the Nevada Democrat left a meeting at the White House with other Democrats late Thursday without talking to reporters.

But according to The New York Times, which quoted a Democratic aide, Reid informed the president of his inclination to add the public option to the bill Thursday, but did not specifically ask him to endorse the approach. Reid is reportedly calculating whether his caucus would support the legislation if there was a way for states to opt out of the government plan.

Several officials said no final decisions had been made, with one possibility that the idea was being circulated to see whether it could attract enough support to survive on the Senate floor.

If not, it surely would be jettisoned beforehand, with liberals urged to accept something less or risk defeat of health care legislation. There is little margin for error among Obama's allies in the Senate as they confront nearly unanimous Republican opposition.

Legislation taking shape in the House is also expected to include a public option, although it is unlikely states would be allowed to opt out.

House Speaker Nancy Pelosi was working to determine how to design a government insurance option in the House bill, Democratic officials said, after a vote count in recent days showed that her preferred approach — which would tie reimbursement rates to doctors and hospitals to rates paid by Medicare — didn't command enough support to pass.

"At the end of the day we will have a public option" in the House bill, Pelosi told a news conference on Friday.

Some moderates have been leery of that approach because those lower rates could hurt hospitals and providers, particularly in rural areas.

After months of struggle, both houses are expected to vote in the next few weeks on sweeping legislation that expands coverage to millions of Americans who lack it and bans industry practices such as denial of coverage for pre-existing medical conditions.

Democratic moderates are skeptical of allowing the government to sell insurance, concerned that it would mark an unwarranted federal intrusion into the private marketplace and potentially jeopardize payment rates to doctors, hospitals and other providers.

Conrad, for example, has said repeatedly he could not accept a plan with payments tied to Medicare, the federal health care program for the elderly, because rates in North Dakota are too low to give doctors an incentive to treat additional patients.

The House and Senate measures aim to expand coverage to about 95 percent of the population, and include federal subsidies to help lower-income families afford coverage and permit small businesses to provide it for their employees.

The two bills differ at many points, although both are paid for through a combination of cuts in future Medicare spending and higher taxes.

Democrats hold a 60-40 majority in the Senate, counting two independents, precisely the number needed to overcome a threatened Republican filibuster. Sen. Olympia Snowe, R-Maine, voted for the health care bill that cleared the Senate Finance Committee recently, but she has long voiced opposition to a public option along the lines under consideration, as has Nelson, and other moderate Democrats have voiced skepticism. Without 60 votes, the legislation could stall even before debate began in earnest.



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Sources: MSNBC, Rachel Maddow Show, Google Maps