The recent blowout in the Gulf of Mexico is on everyone’s minds these days. President Obama, under public pressure to take action against the oil and gas industry, recently announced he wants to trim tax incentives for the oil and gas industry. He may face new hurdles in doing so because of the new-found political powers of corporations.
The industry is doing well today because public policy supports the exploration for new domestic energy sources. BP’s drilling in the Gulf was part of that effort. Now that they enjoy robust incentives, the industry probably won’t give them up willingly. Try taking a bone away from a bulldog. He’s not inclined to let you have it.
In January the Supreme Court overturned provisions of federal campaign finance law which limited corporations and unions from spending money directly in campaign advertising. Under the aegis of free speech, the decision “unleashes the floodgates of corporate and union general treasury spending” in political campaigns, as Associate Justice John Paul Stevens wrote in his dissent.
Corporations are creatures of statute; the Constitution doesn’t mention them at all. So how did corporations start getting treated on par with human beings?
In a quirk of American judicial history, in 1886 a court reporter slipped language into a Supreme Court decision headnote that implied corporations were entitled to equal protection under the Fourteenth Amendment. Nobody caught it, and subsequent courts started citing the case as law.
Granted, the First Amendment broadly says “Congress shall make no law … abridging the freedom of speech.” But as Justice Stevens saw it, the Founding Fathers “had little trouble distinguishing corporations from human beings, and when they constitutionalized the right to free speech in the First Amendment, it was the free speech of individual Americans that they had in mind.”
Federal election restrictions on corporations date back to 1907, when Congress banned all corporate contributions to candidates. The Senate Report on the legislation at that time observed that the “evils of the use of (corporate) money in connection with political elections are so generally recognized that the committee deems it unnecessary to make any argument in favor of the general purpose of this measure. It is in the interest of good government and calculated to promote purity in the selection of public officials.”
How could a corporate heavyweight influence a political campaign?
Take the case of Hugh Caperton and behemoth Massey Coal Company. Caperton, owner of another small coal company, sued Massey in West Virginia for fraud and breach of contract, and in 2002 won a $50 million judgment. (Yes, Massey is the same coal company where 29 miners died in an explosion two months ago.) In 2004, Massey’s CEO, Brent Benjamin, spent $3 million of his own money to help unseat a West Virginia Supreme Court justice. Massey then appealed the jury verdict and won 3-2, with the new justice voting in its favor. On review, the U.S. Supreme Court held that the new justice should have recused himself from the Massey appeal.
Benjamin did nothing illegal; it was his personal cash. But now corporations like Massey will be able to spend their own money in similar efforts, effectively buying legislative seats to protect their interests.
To fix the Gulf oil leak, BP alone claims to have $5 billion in available cash, $5 billion in bank credit lines and an additional $5 billion in standby credit facilities. That’s a lot of firepower held by one of many oil companies, some of which could possibly be directed toward fall elections in the best interests of stockholders. The general public has neither the cohesiveness nor the cash to respond.
Justice Stevens conceded in his dissent that lengthy and expensive lawsuits like Caperton’s might catch some of the worst abuses. “This will be small comfort to those States that, after today, may no longer have the ability to place modest limits on corporate electioneering,” he added. And the effects may be irreparable, as we may learn on the Gulf coast.
What’s next? Justice Stevens wrote, “Under the majority’s view, I suppose it may be a First Amendment problem that corporations are not permitted to vote, given that voting is, among other things, a form of speech.”
But corporations won’t need to go there. They now have more subtle and more effective ways to protect their interests. Unless Congress acts first, corporations may target members of Congress who side with the President in efforts to trim back corporate welfare to the oil and gas industry.
The very people who cry for smaller government forget that a weak government cannot provide the safeguards we expect – from national security to the regulation of offshore oil drilling, subordinated debentures and Bernie Madoff’s Ponzi schemes to name but a few. Everyone wants small government until they need a big strong government. By then, it’s too late.
In 1816 Thomas Jefferson wrote, "I hope we shall... crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country."
Apparently, we have failed.
Showing posts with label Jefferson. Show all posts
Showing posts with label Jefferson. Show all posts
Saturday, June 5, 2010
Sunday, April 26, 2009
Bainbridge Sails Again
The dramatic release of the MV Maersk Alabama and the rescue of her captain from pirates off Somalia have been widely applauded as a major success for the Obama administration. But it’s not the first time the United States has flexed its muscle to protect American interests from pirates on the high seas, and it won’t be the last.
The Maersk Alabama was a 17,000 ton cargo ship containing emergency relief supplies destined for Kenya. Somali, enveloped in anarchy and poverty, has been a hotbed for pirates in recent years because of the enormous profits involved. There have been seventy pirate attacks since January, and 14 foreign ships and 260 crewmen are currently being held for ransom. The Maersk Alabama was the first American-flagged ship to be waylaid in almost 200 years.
Piracy has been around for centuries. Any local warlord with a few fast boats could hijack a passing merchant ship and hold it for ransom from its owner. Safe passage could sometimes be guaranteed in advance by the payment of tributes to local leaders, for whom it became a lucrative source of revenue. Although only used once during World War II, Article I of our Constitution authorizes Congress to issue letters of marque and reprisal, meaning we could enter the piracy business if we wanted.
Dealing with piracy was one of the first great international challenges of the United States. After the American Revolution, our fledgling Navy was inadequate to protect shipping that was so essential to the country’s survival. In 1784, Congress began allocating protection money for pirates along the Barbary Coast of the Mediterranean. Thomas Jefferson, then the ambassador to France, argued that paying tribute would only encourage more attacks, but in the short run it was less expensive to pay the tribute until an adequate Navy could be built. By 1800, the ransoms and tributes we were paying amounted to twenty percent of the annual revenues of the United States.
When Jefferson became president in 1801, the ruler of Tripoli demanded $225,000 from the United States for safe passage through the Mediterranean. Jefferson refused, and began deploying ships and blockading ports on the Barbary Coast. For the next four years, American ships clashed sporadically with pirate frigates. One American ship, the USS Philadelphia, ran aground in Tripoli harbor while chasing a pirate ship, and was converted to a Tunisian gun battery against the Americans until it was torched by Stephen Decatur Jr. and the U.S. Marines four months later.
In 1805 an expedition of eight Marines and 500 mercenaries marched from Egypt to capture the city of Derna, marking the first time the American flag was raised in victory on foreign soil.
Under assault and weary of the blockade on his port, the ruler of Tripoli signed a peace treaty with the United States, exchanging captives for $60,000 in ransom. The U.S. had proven it could execute a war far from home, could support a navy, and could fight as one country rather than separate states.
When the United States became distracted with the War of 1812 with England, piracy resumed, and the United States had little choice but to start paying ransoms again.
After the war ended, the United States sent ten ships to the Barbary Coast and forced the pirate ruler to capitulate. The resulting treaty ensured no further tributes and granted the United States full shipping rights to this day.
The great irony of this story is the history behind the USS Bainbridge. Launched in 2004, she is the fifth American warship named for Commodore William Bainbridge. In 1800, as captain of the USS George Washington, it was Bainbridge who delivered American tributes to pirate leaders along the African coast. While making a delivery to the ruler in Algiers, he made the mistake of anchoring in the harbor directly under the guns of the fort. The ruler insisted that Bainbridge hoist the Algerian flag and shuttle the Algerian ambassador on an errand to Turkey, or be sunk; Bainbridge complied with the embarrassing demand, much to the delight of the pirates.
In 1803 Bainbridge was the captain of the ill-fated Philadelphia when it became stranded in Tunisia. He was held captive in Tripoli for nineteen months. After he was released as part of Jefferson’s treaty with Tripoli, he served as captain of the USS Constitution during the War of 1812 and later against the Barbary pirates after the war with England ended.
Renegade pirates are no match for Navy Seals, and it’s clear this administration will have little patience for such behavior against United States interests. It’s good to see America’s respect being earned again around the world.
The Maersk Alabama was a 17,000 ton cargo ship containing emergency relief supplies destined for Kenya. Somali, enveloped in anarchy and poverty, has been a hotbed for pirates in recent years because of the enormous profits involved. There have been seventy pirate attacks since January, and 14 foreign ships and 260 crewmen are currently being held for ransom. The Maersk Alabama was the first American-flagged ship to be waylaid in almost 200 years.
Piracy has been around for centuries. Any local warlord with a few fast boats could hijack a passing merchant ship and hold it for ransom from its owner. Safe passage could sometimes be guaranteed in advance by the payment of tributes to local leaders, for whom it became a lucrative source of revenue. Although only used once during World War II, Article I of our Constitution authorizes Congress to issue letters of marque and reprisal, meaning we could enter the piracy business if we wanted.
Dealing with piracy was one of the first great international challenges of the United States. After the American Revolution, our fledgling Navy was inadequate to protect shipping that was so essential to the country’s survival. In 1784, Congress began allocating protection money for pirates along the Barbary Coast of the Mediterranean. Thomas Jefferson, then the ambassador to France, argued that paying tribute would only encourage more attacks, but in the short run it was less expensive to pay the tribute until an adequate Navy could be built. By 1800, the ransoms and tributes we were paying amounted to twenty percent of the annual revenues of the United States.
When Jefferson became president in 1801, the ruler of Tripoli demanded $225,000 from the United States for safe passage through the Mediterranean. Jefferson refused, and began deploying ships and blockading ports on the Barbary Coast. For the next four years, American ships clashed sporadically with pirate frigates. One American ship, the USS Philadelphia, ran aground in Tripoli harbor while chasing a pirate ship, and was converted to a Tunisian gun battery against the Americans until it was torched by Stephen Decatur Jr. and the U.S. Marines four months later.
In 1805 an expedition of eight Marines and 500 mercenaries marched from Egypt to capture the city of Derna, marking the first time the American flag was raised in victory on foreign soil.
Under assault and weary of the blockade on his port, the ruler of Tripoli signed a peace treaty with the United States, exchanging captives for $60,000 in ransom. The U.S. had proven it could execute a war far from home, could support a navy, and could fight as one country rather than separate states.
When the United States became distracted with the War of 1812 with England, piracy resumed, and the United States had little choice but to start paying ransoms again.
After the war ended, the United States sent ten ships to the Barbary Coast and forced the pirate ruler to capitulate. The resulting treaty ensured no further tributes and granted the United States full shipping rights to this day.
The great irony of this story is the history behind the USS Bainbridge. Launched in 2004, she is the fifth American warship named for Commodore William Bainbridge. In 1800, as captain of the USS George Washington, it was Bainbridge who delivered American tributes to pirate leaders along the African coast. While making a delivery to the ruler in Algiers, he made the mistake of anchoring in the harbor directly under the guns of the fort. The ruler insisted that Bainbridge hoist the Algerian flag and shuttle the Algerian ambassador on an errand to Turkey, or be sunk; Bainbridge complied with the embarrassing demand, much to the delight of the pirates.
In 1803 Bainbridge was the captain of the ill-fated Philadelphia when it became stranded in Tunisia. He was held captive in Tripoli for nineteen months. After he was released as part of Jefferson’s treaty with Tripoli, he served as captain of the USS Constitution during the War of 1812 and later against the Barbary pirates after the war with England ended.
Renegade pirates are no match for Navy Seals, and it’s clear this administration will have little patience for such behavior against United States interests. It’s good to see America’s respect being earned again around the world.
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