December 2008

Hilda Solis and Xavier Becerra were both picked for Barack Obama’s cabinet in positions that are intensely important to the labor movement, Secretary of Labor and US Trade Representative, respectively. Both also come from Los Angeles, the home of the largest and most systematic case of labor crime currently being investigated, that of Tyone Freeman, formerly the head of the LA chapter of SEIU. This has been well documented by the LA Times’ Paul Pringle.

So I asked myself, how close is Solis to SEIU? Turns out pretty close. In 2000, Solis beat 71  year old Democratic incumbent Matt Martinez in a contested primary. In 1999, Solis received two donations from the SEIU. That is, in a Democratic primary, against an incumbent Democrat, she got SEIU’s endorsement and money.

First, she received $5k, the maximum, from SEIU’s national PAC:

She also received $250 from SEIU’s Sacramento lobbyist:

One can only assume that she got logistical support on the ground too.

I would also note that TPM’s write up of "labor leaders hail Obama’s pick" quotes only one union leader, Andy Stern the head of SEIU, and even gives a picture of Stern, rather than Solis in the story.

Sounds like SEIU got their candidate. So how close is Solis to Stern and Freeman? Are these relationships going to come up in the confirmation hearings?

In October, I wrote about the problems caused by signficant investment losses in CalPERS, the California Public Employees Retirement System. At that point CalPERS had lost 20% of its value in 4 months and was going to state and local tax-payers to demand that they make up the hole in their investments.

Well, they screwed up, and they are back asking for more money. Not only did they lose invested money, but they were actually leveraged up, so they did particularly badly. From the WSJ:

Calpers in recent weeks said it expects to report paper losses of 103% on its housing investments in the fiscal year ended June 30. That’s because Calpers invested not only its own money, but billions of dollars of borrowed money that must be repaid even if the investment fails. In some deals, as much as 80% of the money invested by Calpers was borrowed.

Now, obviously, it is terrible thwhen at any investor loses their shirts. But it seems that this is just blatant risk mismanagement, shifting assets to higher-risk investment vehicles:

But Calpers has targeted less money in bonds, and about double the allocation to private-equity investments and real-estate deals, than the average public pension fund, according to Calpers documents and an industry survey. …

Since the average rate applies to Calpers’s entire housing portfolio, some individual deals used as much as 80% borrowed money, Mr. McCook recalls. That level is more aggressive than many pension funds or land developers would use, industry consultants and developers say.

So how do they fill the gap? The tax-payer:

Calpers is now warning California’s cities, towns and schools that they may have to cough up more money to cover the retirement and other benefits the fund provides for 1.6 million state workers. Some towns are already cutting municipal services, and at least one is partly blaming the Calpers fees.

Let’s get this straight. The pension managers mismanage their money by engaging in more risky investments, the investments go under, and now the people of California have to foot the bill so that public employees don’t have to suffer?

What about the rest of us? Why do public employees deserve to get bailed out, but not the rest of the pension holders?

Stopping this has got to be a political winner. If I were a California activist, I would be pushing a ballot measure that would require a referendum to approve any additional taxes to fill gaps in CalPERS.

Mark Tapscott notes my post on ethics and proposes some more ideas that would involve real pain for legislators and their staff:

First, apply the Freedom of Information Act to Congress. Most Americans resent that Congress passes laws it expects the rest of us to abide by but exempts itself. Ending the 42-year-old congressional FOIA exemption would be a major step in the right direction and one that would call the Democrats bluff on the transparency issue.

Second, require Members and their key personal and committee staff members (chiefs of staff, legislative directors, committee staff directors, legal counsels, possibly others) to maintain online daily calendars recording names and titles of all participants in meetings concerning any proposed legislation or expenditure of federal funds.

Third, abolish the absurd categorical values in the annual financial disclosures required of Members. Show us the money, the shares, the property, the consideration, Congressman. Require the same level of disclosure for key staff members included in the second suggestion.

I have also heard the idea of limiting lobbying by spouses or family of members, an issue that is coming up in Barack Obama’s transition.

Barney Frank thinks that companies are people too:

"No, we’re not propping up companies," Frank insists. "That’s your mistake. We’re propping up individuals. The world doesn’t consist of companies. The world are people. The country is people. And yes, it is possible to argue that the government…"

So next time we try to cut corporate taxes to help our competitiveness, don’t let him tell you that you are just trying to help companies.

With Rod Blagojevich and Charlie Rangel in the news and under pressure from the media, now is the time for the House and Senate GOP caucuses to push a real transparency and ethics agenda. On January 6th, both Houses will meet and begin the work of passing rules. We need to have some specific proposals, and this is not something that I follow well. Furthermore, the GOP ought to shoot big here. Frankly, we aren’t going to run Congress for a while, so let’s max this out.

Imagine some proposals:

First, in both bodies, allow individuals to submit ethics complaints and require the various ethics committees to officially reject complaints.

Second, faster and more complete campaign finance proposals. All contributions down to $5, or even just all contributions, should be disclosed. Electronic contributions should be disclosed within 72 hours and checks should be disclosed within 72 hours of deposit. These would be real-time disclosed on the FEC website. This would solve the problem that the Sunlight Foundation and others have tried to address with S. 223.

Third, put video of all publicly accessible business meetings online. I am sure that C-SPAN and Google would be happy to help. I know that many committees keep video of markups, but release neither the video nor transcripts.

Fourth, I am sure that there are things that are specific to disclosure of financial interests that we have learned out of the Rangel affair. Through that in.

Only the second item needs to be implemented in law. If it got to Barack Obama’s desk, he would have to sign it, and it would be embarassing.

The others can be the basis of a rules fight at the beginning of the session. Make these new Democrats who ran on ethics vote against transparency and for their leadership or against their leadership.

Furthermore, let’s seperate Obama from the Demcratic Congress. Let’s praise his transparency measures, like disclosing meetings of his transition teams, while smacking the Congressional majorities around.

Financial services, car companies, and media outlets aren’t the only people facing layoffs this winter. Conservative groups are too. National Journal reported on NAM:

The National Association of Manufacturers, which employs one of the highest paid DC trade association executives, John Engler, who received total compensation of $1.2 million in 2006, has laid off staff just weeks before Christmas, a spokesman for the organization confirmed. He said someone would call me back to say how many employees were let go. One source said as many as eight or ten people received pink slips.

I know of three other high profile conservative groups that are cutting, one 20% of staff and anothers are cutting quite deep. I am not even counting Freedom’s Watch. This is in addition to all the professional Republicans left unemployed by election day, and the resulting shift at lobbying firms.

Some of this is due to the economic cycle, like Sheldon Adelson’s bankruptcy. I imagine that the small-dollar direct-mail and telemarketing that sustains so many smaller groups is falling, but those numbers are harder to get. Some, like the lobbying firms, are a direct result of the political cycle. But when you talk to the donors you hear something more. They are tired of being taken for a ride. They understand that a lot of the older institutions are not providing value. You do see a fetishizing of new media and technology right now because it’s the only really new thing that people are coming to donors with, but they understand that there is some snake-oil out there and are getting confused.

Ultimately, they want value, and they want leadership. And they are cutting off an establishment that isn’t providing either.

This is happening at the same time as many of these groups are considering succession plans. Suddenly, a lack of leadership, a lack of funds, and a dismal political and economic climate are making some of these people think twice about the future of their organizations.

This should be an opportunity. For a while, people in the conservative movement are going to have to live lean and demonstrate value. When people get excited again, whether around new candidates, a new batch of ideas, or responding to Barack Obama and Democratic proposals, they will be opportunities for people that have been putting points on the scoreboard. In the meantime though, it’s going to be very scary.

When we get onm the other side of this, the movement is going to look very different.

A fantastic interview with Barack Obama’s campaign manager David Plouffe. It really shows the link between organization, technology, and media. It also shows how we need to shift focus on budgetting.

In response to a question about how much the campaign spent on media, Plouffe responds:

D.P.: Right, the playbook is 70 to 75 percent, and we did much less than that. Under 50 percent.

I have argued that the fundamental innovation of the Obama campaign wasn’t technology, but it was the investment in grassroots. You can see this Plouffe’s explanation:

D.P.: Well, we spent obviously a lot of money on TV, but as a ratio of our spending, it was much lower than historically is done, and that’s because we spent a lot of money in the field and on the ground. And, in fact, when we did our baseline budget, the field was fully funded because we thought it was very, very important. If we were to raise excess funds, we bolstered the field a little bit, but it went in advertising. Our first priority was the ground operation because we thought that was essential to us winning. It’s very much, I think, a unique approach. In a lot of campaigns, the media gets funded first, then if you have extra money that comes in, you bolster the field and things of that sort. And we kind of did it in reverse.

Patrick, Mindy, Turk, and others have had to argue for shifting a couple of percent of the media budget to online expenditures. They are correct. It is important to enhance an organization. But where do you get the organization? Obama decided to build it.

Think of the seeming insanity of the Obama approach. Build an organization early on, with a minimal media budget. And then use the overage for media, if you can get it.

But it worked. Read on for some of the details.

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Pete Snyder, my boss at New Media Strategies, noted this and the link to technology earlier:

Obama acted quite differently. Having opted-out of his promise to abide by campaign finance laws (which proved to be one of his shrewdest and smartest moves), he went for broke. His campaign started pouring millions of dollars into opening scores of campaign offices in all 50 states, many in areas that Democrats hadn’t contested in decades. In the traditionally GOP-favoring Colorado, Obama set up 59 campaign offices to McCain’s 13.

In 2004, the Bush-Cheney campaign learned that there was a linear relationship between staffed field offices and volunteer activism and enthusiasm. Obama learned that lesson and applied it:

This time around, everyone counted. And given the power of social media, everyone who has the interest has the ability to influence and mobilize networks of friends. A blue dot in a sea of red could now make a real impact, both vote-wise and dollar-wise, to a presidential campaign. Obama got this and McCain really didn’t.

Early field investment, combined with effective technology, allowed the campaign to later leverage that technology into an organization that, among other things, raised unprecedented amounts of money. With much the same theory as direct mail, you invest early, build a list (in the end nearly 14m people) and then contact it repeatedly for activation and fundraising.

Some Republicans have argued that Obama’s organization will have been a one-off. I am not so sure, although it may only apply at the Presidential level, something Plouffe suggested. In 2012, we will see it again. And we may see it deployed in 2010 or 2014. We aren’t going to be able to approach Obama’s advantages in the meantime. And we can expect that some 2016 Democratic Presidential candidates will try a similar strategy.

This does suggest that campaigns, especially ones at the top of the ballot, should consider shifting more resources towards field and enhancing them with robust technology.

When Barack Obama was on the ballot in Georgia, Jim Martin was within 3% of Saxby Chambliss. Without Obama, Martin gets blown out by 20%. Saxby’s message was that a vote for Martin was a vote for a blank check for Democrats.

Today Georgians rejected a blank check for the Democratic Party by far more than typical GOP margins in a red state.

This tells us that Americans picked Obama and change, but not a broad Democratic or left-leaning agenda for America. Open Left’s David Sirota understood this last week when he said:

So now, because of this, you have a large majority (though not the whole) of his 10 million-person email list overarchingly organized around the celebrity Barack Obama – not really around issues (though certainly people can like Obama and support specific issues).

So when the Democrats try to push through outrageous things like card-check, significant tax-increases, etc., all we need to do is point to tonight. When progressives were on the ballot, not just a celebrity, the progressives were roundly rejected.