Build Back Cheaper, and Other Failures of the Centrist Imagination
Newsletter 117: RDP ramps up efforts to track the how much and the how of Biden’s corporate crime fighting
Across the Biden administration, officials have promised (long overdue) accountability for corporate criminals. But talk is cheap. We at the Revolving Door Project are eager to see serious action to back it up. Our latest analysis, released yesterday, shows the administration is falling short of its ambitious rhetoric. We found that it “pursued at least 24 prosecutions and rulemakings to crack down on white-collar crime this winter, but took no action against at least 48 crimes or abuses.” You can read more about those cases in our brand new tracker. Our team will add updates regularly and share a biweekly news round-up with newsletter subscribers.
Beyond simply tallying actions, the Revolving Door Project will also be closely monitoring whether the administration’s enforcement is adequate to deter future bad behavior. As Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra made clear in a recent, forceful speech, the enforcement status quo has failed in this regard. He notes, “even in our [the CFPB’s] relatively short existence, we have seen what other enforcement regulators have been seeing for decades: large financial institutions crossing legal fault lines over and over again.” The remedies he proposes – bright line rules and structural changes, including growth caps and divestitures – should be a roadmap not just for the CFPB, but for the administration’s enforcement agenda writ large.
We’re also continuing to monitor how the administration is talking about the actions it takes. As I previously wrote for The American Prospect, “In a crowded information environment, simply adopting populist policies—even entirely achievable ones—is not enough. Biden needs a populist communications strategy to match.” That means that the administration should be naming and bashing specific corporate villains at every possible opportunity.
Officials should not just think of rhetoric as a political tool, however, but also one that can produce immediate, tangible outcomes. Just look at the CFPB, where chiding remarks about specific corporate bad behavior and simple requests for information have led to concrete action from corporations on multiple occasions. The resulting wins, which include credit reporting agencies dropping most medical debt from consumers’ credit scores and banks reducing or eliminating overdraft fees, are nothing to scoff at. Other regulators should seek to incorporate similar messaging into their tool chest to produce immediate results for regular people, even as they work on more enduring, non-voluntary solutions.
Independent Agencies
As Max Moran lays out in a new blog, the Biden administration’s ambitions for white collar enforcement are suffering as a result of persistent vacancies on independent agency boards. The Federal Trade Commission, for example, was not able to block Amazon’s acquisition of MGM studios earlier this month because it lacks a Democratic majority. Meanwhile, after Sarah Bloom Raskin’s nomination to be the Federal Reserve’s Vice Chair of Supervision was defeated earlier this month, that seat is likely to remain vacant for the foreseeable future, with troubling implications for the strength of regulatory action at the agency.
The causes are multifold. As we complained starting early last year, the Biden administration has not acted with enough urgency to fill independent agency seats. He didn’t nominate his second Federal Trade Commission nominee, Alvaro Bedoya, until September. And, despite the fact that we were encouraging him to put forward Federal Reserve nominations as early as last spring, he didn’t send the bulk of his nominations to the Senate until January. The Senate confirmation process, meanwhile, has compounded delays and provided openings for sabotage. To help the Biden administration make good on its promises to hold corporations accountable, Senate Democrats should continue to explore ways to accelerate confirmations and get agencies working for the public faster.
Beyond simply moving more quickly, the White House, for its part, also needs to be more strategic about using all available nominations to advance its agenda, or at least contain potential damage. Since many independent agency commissions are politically balanced, President Biden has several openings before him that he has to fill with Republican commissioners (or, at least, not Democrats). While it is customary to defer to the Republican majority leader when it comes to these picks, it is not required. After President Trump and Mitch McConnell’s norm-breaking blockade on Democratic nominations to these seats, such deference is decidedly not due. And yet, the White House appears to be continuing to grant it.
Most recently, for example, President Biden renominated Republican Rebecca Dye, who has proudly stated that “I’ve never seen a regulation I liked,” to the Federal Maritime Commission. As my colleagues Mekedas Belayneh and Dylan Gyauch-Lewis outlined in a recent blog, to solve the crisis in maritime shipping, we urgently need a Federal Maritime Commission that likes maritime regulation and is willing to use it. In simply reinstalling Dye for another term, Biden missed an opportunity to nominate a Republican commissioner with an interest in antitrust action (not exactly a heavy lift given the political potency of inflation and some Republicans’ apparent willingness to entertain anti-monopoly politics) and to kickstart much needed action from the agency.
Governance
This week may be remembered as one of painful missed opportunities. From the breathtakingly irresponsible decision to increase domestic methane gas emissions for years to come instead of pivoting decisively away from fossil fuels, to the framing of Biden’s budget proposal, the recent failures of centrist imagination have been particularly stark.
Biden’s budget framing embraces “law and order” and the brand of “fiscal responsibility” that weighs the costs but not the benefits of social spending, while throwing hundreds of billions of dollars at military contractors. While Republicans will rail about “fiscal irresponsibility” regardless of what a Democratic president puts in his budget, Americans will remember how widely popular and urgently needed social programs were thrown under the bus.
Amidst the genuinely terrifying ongoing failure of the government to acknowledge and act on the threat that the climate crisis presents to American stability and prosperity it can be tempting to gloss over the nitty-gritty details of governance. But the details of this budget are worth scrutinizing, even as (and because) they’re not yet set in stone.
We’re still completing our analysis, but from what we’ve found so far, Biden’s budget requests for key agencies in FY2023 echo the FY2022 omnibus’ failure to enact funding increases that keep up with the past decade of inflation, let alone exceed those levels. The “historic” funding increase for the National Labor Relations Board, up to $319 million, does not match what the increase should be—$352.85 million—if it had increased at the rate of inflation since 2009. A recent HuffPost article on the Labor Board’s slow withering highlights the consequences of inflation continually outpacing investment in worker protection.
Likewise, Biden’s “large” increase for the Environmental Protection Agency up to $11.881 billion would not bring the agency in line with where it would be just accounting for inflation (and not the growth of the population or economy) since 2010, which would be closer to $13 billion.
Biden’s proposed funding increases for the DOJ Antitrust Division and the Federal Trade Commission are exceptions to this trend, perhaps thanks to their central role in fighting inflation. The proposed $88 million dollar increase to Antitrust’s $197 million dollar budget outstrips how it would have increased in line with inflation from 2010, to $257 million. Likewise, the proposed $139 million dollar increase to the FTC’s $$376 million dollar budget in 2022 exceeds its 2010 level accounting for inflation, which would be $460 million.
If spending were likewise increased for enforcement work at other agencies, Biden could merge cracking down on what RDP Executive Director Jeff Hauser has called the “golden age of white-collar crime” with anti-inflation efforts. Given the challenge of getting anything through Congress, clever and targeted investments in programs that advance several priorities at once may be Biden’s best bet for tackling the nation’s immense problems.
Personnel
Amazingly, well over a year after Biden took office, he’s not yet done removing the Trump appointees he’s legally empowered to fire. RDP’s Dorothy Slater recently wrote for The New Republic about Jeff Lyash, the unsavory CEO of the Tennessee Valley Authority, a federally-owned public utility company. As Slater summarizes the situation: “we have a former fossil fuel executive in an unelected, unaccountable, decision-making position at a public, federally owned utility, who is raking in nearly $10 million per year. The board, which is also allied with fossil fuels, just transferred even more power to him. His decisions affect the energy costs and supply for over 10 million people and his financial interests are, at the time, a complete mystery to the public.”
Biden has the capacity to replace the entire board of the TVA, who could then fire Lyash and replace him with someone who, as Slater put it, “might more plausibly have the best interest of the environment and TVA’s customers in mind.” In the meantime, the TVA is planning to spend billions of dollars constructing new methane gas plants and pipelines, instead of transitioning to renewable energy. On Monday, the Southern Environmental Law Center sued the TVA for refusing to provide unredacted records of its contract with pipeline developers, in violation of the Freedom of Information Act.
The Tennessee Valley Authority’s move to lock in years of costly and unnecessary fossil fuel development is an egregious affront to the public trust that demands action. While the TVA board is stacked with Trump appointees, Biden could correct that at any time; he cannot blame this ongoing misgovernance on his predecessor.
Another revolving door issue resurfacing of late is the influence of Anita Dunn—of the “D” in Washington consulting firm SKDK—within the Biden White House. Some readers may remember that we first elevated the problems surrounding Dunn’s disclosure practices and ethics commitments last summer. The Washington Post wrote Monday about the ethics concerns raised by Dunn’s most recent temporary appointment as a “special government employee" this March, following her longer White House stint last year. Her $129,000 White House salary in 2021 “fell just below the $132,552 threshold that would have required her to publicly list clients who had paid her more than $5,000 in the two previous years,” and as a special government employee she “avoided an additional Biden ethics rule that restricts former White House officials from coordinating or advising lobbying efforts for one year, even if they do not directly contact officials themselves.” As I told the Post, “That’s just really damaging from the perspective of public trust. She should really have been subject to these rules.” That was true when we first found these gaps last year. It is all the more true now in light of her continuing influence over the White House.
Thanks to Hannah Story Brown for her contributions to this edition.
Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:
The DOJ Should Follow Its Own Guidance on FOIA Administration
Biden Gave Most Corporate Crimes A Pass This Winter, New Analysis Shows
An Activist Investor Goes Quiet.
A Google billionaire's fingerprints are all over Biden's science office
Anita Dunn and SKDK: Power and influence in Biden's Washington
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