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How the Corporations Broke Ralph Nader and America, Too April 6, 2010

Posted by rogerhollander in Democracy, Media, Right Wing.
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Posted on Apr 5, 2010, www.truthdig.com
Ralph Nader
AP / Carolyn Kaster
 

By Chris Hedges

Ralph Nader’s descent from being one of the most respected and powerful men in the country to being a pariah illustrates the totality of the corporate coup. Nader’s marginalization was not accidental. It was orchestrated to thwart the legislation that Nader and his allies—who once consisted of many in the Democratic Party—enacted to prevent corporate abuse, fraud and control. He was targeted to be destroyed. And by the time he was shut out of the political process with the election of Ronald Reagan, the government was in the hands of corporations. Nader’s fate mirrors our own.

“The press discovered citizen investigators around the mid-1960s,” Nader told me when we spoke a few days ago. “I was one of them. I would go down with the press releases, the findings, the story suggestions and the internal documents and give it to a variety of reporters. I would go to Congress and generate hearings. Oftentimes I would be the lead witness. What was interesting was the novelty; the press gravitates to novelty. They achieved great things. There was collaboration. We provided the newsworthy material. They covered it. The legislation passed. Regulations were issued. Lives were saved. Other civic movements began to flower.”

Nader was singled out for destruction, as Henriette Mantel and Stephen Skrovan point out in their engaging documentary movie on Nader, “An Unreasonable Man.” General Motors had him followed in an attempt to blackmail him. It sent an attractive woman to his neighborhood Safeway supermarket in a bid to meet him while he was shopping and then seduce him; the attempt failed, and GM, when exposed, had to issue a public apology. 

But far from ending their effort to destroy Nader, corporations unleashed a much more sophisticated and well-funded attack. In 1971, the corporate lawyer and future U.S. Supreme Court Justice Lewis Powell wrote an eight-page memo, titled “Attack on American Free Enterprise System,” in which he named Nader as the chief nemesis of corporations. It became the blueprint for corporate resurgence. Powell’s memo led to the establishment of the Business Roundtable, which amassed enough money and power to direct government policy and mold public opinion. The Powell memo outlined ways corporations could shut out those who, in “the college campus, the pulpit, the media, the intellectual and literary journals,” were hostile to corporate interests. Powell called for the establishment of lavishly funded think tanks and conservative institutes to churn out ideological tracts that attacked government regulation and environmental protection. His memo led to the successful effort to place corporate-friendly academics and economists in universities and on the airwaves, as well as drive out those in the public sphere who questioned the rise of unchecked corporate power and deregulation. It saw the establishment of organizations to monitor and pressure the media to report favorably on issues that furthered corporate interests. And it led to the building of legal organizations to promote corporate interests in the courts and appointment of sympathetic judges to the bench. 

“It was off to the races,” Nader said. “You could hardly keep count of the number of right-wing corporate-funded think tanks. These think tanks specialized, especially against the tort system. We struggled through the Nixon and early Ford years, when inflation was a big issue. Nixon did things that horrified conservatives. He signed into law OSHA, the Environmental Protection Agency and air and water pollution acts because he was afraid of the people from the rumble that came out of the 1960s. He was the last Republican president to be afraid of liberals.”

The corporations carefully studied and emulated the tactics of the consumer advocate they wanted to destroy. “Ralph Nader came along and did serious journalism; that is what his early stuff was, such as ‘Unsafe at Any Speed,’ ” the investigative journalist David Cay Johnston told me. “The big books they [Nader and associates] put out were serious, first-rate journalism. Corporate America was terrified by this. They went to school on Nader. They said, ‘We see how you do this.’ You gather material, you get people who are articulate, you hone how you present this and the corporations copy-catted him with one big difference—they had no regard for the truth. Nader may have had a consumer ideology, but he was not trying to sell you a product. He is trying to tell the truth as best as he can determine it. It does not mean it is the truth. It means it is the truth as best as he and his people can determine the truth. And he told you where he was coming from.”

The Congress, between 1966 and 1973, passed 25 pieces of consumer legislation, nearly all of which Nader had a hand in authoring. The auto and highway safety laws, the meat and poultry inspection laws, the oil pipeline safety laws, the product safety laws, the update on flammable fabric laws, the air pollution control act, the water pollution control act, the EPA, OSHA and the Environmental Council in the White House transformed the political landscape. Nader by 1973 was named the fourth most influential person in the country after Richard Nixon, Supreme Court Justice Earl Warren and the labor leader George Meany.

“Then something very interesting happened,” Nader said. “The pressure of these meetings by the corporations like General Motors, the oil companies and the drug companies with the editorial people, and probably with the publishers, coincided with the emergence of the most destructive force to the citizen movement—Abe Rosenthal, the editor of The New York Times. Rosenthal was a right-winger from Canada who hated communism, came here and hated progressivism. The Times was not doing that well at the time. Rosenthal was commissioned to expand his suburban sections, which required a lot of advertising. He was very receptive to the entreaties of corporations, and he did not like me. I would give material to Jack Morris in the Washington bureau and it would not get in the paper.”

Rosenthal, who banned social critics such as Noam Chomsky from being quoted in the paper and met frequently for lunch with conservative icon William F. Buckley, demanded that no story built around Nader’s research could be published unless there was a corporate response. Corporations, informed of Rosenthal’s dictate, refused to comment on Nader’s research. This tactic meant the stories were never published. The authority of the Times set the agenda for national news coverage. Once Nader disappeared from the Times, other major papers and the networks did not feel compelled to report on his investigations. It was harder and harder to be heard.

“There was, before we were silenced, a brief, golden age of journalism,” Nader lamented. “We worked with the press to expose corporate abuse on behalf of the public. We saved lives. This is what journalism should be about; it should be about making the world a better and safer place for our families and our children, but then it ended and we were shut out.”

“We were thrown on the defensive, and once we were on the defensive it was difficult to recover,” Nader said. “The break came in 1979 when they deregulated natural gas. Our last national stand was for the Consumer Protection Agency. We put everything we had on that. We would pass it during the 1970s in the House on one year, then the Senate during the next session, then the House later on. It ping-ponged. Each time we would lose ground. We lost it because Carter, although he campaigned on it, did not lift a finger compared to what he did to deregulate natural gas. We lost it by 20 votes in the House, although we had a two-thirds majority in the Senate waiting for it. That was the real beginning of the decline. Then Reagan was elected. We tried to be the watchdog. We put out investigative reports. They would not be covered.” 

“The press in the 1980s would say ‘why should we cover you?’ ” Nader went on. “ ‘Who is your base in Congress?’ I used to be known as someone who could trigger a congressional hearing pretty fast in the House and Senate. They started looking towards the neoliberals and neocons and the deregulation mania. We put out two reports on the benefits of regulation and they too disappeared. They did not get covered at all. This was about the same the time that [former U.S. Rep.] Tony Coelho taught the Democrats, starting in 1979 when he was head of the House Campaign Finance Committee, to start raising big-time money from corporate interests. And they did. It had a magical influence. It is the best example I have of the impact of money. The more money they raised the less interested they were in any of these popular issues. They made more money when they screwed up the tax system. There were a few little gains here and there; we got the Freedom of Information law through in 1974. And even in the 1980s we would get some things done, GSA, buying air bag-equipped cars, the drive for standardized air bags. We would defeat some things here and there, block a tax loophole and defeat a deregulatory move. We were successful in staunching some of the deregulatory efforts.”

Nader, locked out of the legislative process, decided to send a message to the Democrats. He went to New Hampshire and Massachusetts during the 1992 primaries and ran as “none of the above.” In 1996 he allowed the Green Party to put his name on the ballot before running hard in 2000 in an effort that spooked the Democratic Party. The Democrats, fearful of his grass-roots campaign, blamed him for the election of George W. Bush, an absurdity that found fertile ground among those who had abandoned rational inquiry for the thought-terminating clichés of television.

Nader’s status as a pariah corresponded with an unchecked assault by corporations on the working class. The long-term unemployment rate, which in reality is close to 20 percent, the millions of foreclosures, the crippling personal debts that plague households, the personal bankruptcies, Wall Street’s looting of the U.S. Treasury, the evaporation of savings and retirement accounts and the crumbling of the country’s vital infrastructure are taking place as billions in taxpayer subsidies, obscene profits, bonuses and compensation are enjoyed by the corporate overlords. We will soon be forced to buy the defective products of the government-subsidized drug and health insurance companies, which will remain free to raise co-payments and premiums, especially if policyholders get seriously ill. The oil, gas, coal and nuclear power companies have made a mockery of Barack Obama’s promises to promote clean, renewal energy. And we are rapidly becoming a third-world country, cannibalized by corporations, with two-thirds of the population facing financial difficulty and poverty. 

The system is broken. And the consumer advocate who represented the best of our democracy was broken with it. As Nader pointed out after he published “Unsafe at Any Speed” in 1965, it took nine months to federally regulate the auto industry for safety and fuel efficiency. Two years after the collapse of Bear Stearns there is still no financial reform. The large hedge funds and banks are using billions in taxpayer subsidies to once again engage in the speculative games that triggered the first financial crisis and will almost certainly trigger a second. The corporate press, which abets our vast historical amnesia, does nothing to remind us how we got here. It speaks in the hollow and empty slogans handed to it by public relations firms, its corporate paymasters and the sound-bite society.

“If you organize 1 percent of the people in this country along progressive lines you can turn the country around, as long as you give them infrastructure,” Nader said. “They represent a large percentage of the population. Take all the conservatives who work in Wal-Mart: How many would be against a living wage? Take all the conservatives who have pre-existing conditions: How many would be for single-payer not-for-profit health insurance? When you get down to the concrete, when you have an active movement that is visible and media-savvy, when you have a community, a lot of people will join. And lots more will support it. The problem is that most liberals are estranged from the working class. They largely have the good jobs. They are not hurting.”

“The real tragedy is that citizens’ movements should not have to rely on the commercial media, and public television and radio are disgraceful—if anything they are worse,” Nader said. “In 30-some years [Bill] Moyers has had me on [only] twice. We can’t rely on the public media. We do what we can with Amy [Goodman] on “Democracy Now!” and Pacifica stations. When I go to local areas I get very good press, TV and newspapers, but that doesn’t have the impact, even locally. The national press has enormous impact on the issues. It is not pleasant having to say this. You don’t want to telegraph that you have been blacked out, but on the other hand you can’t keep it quiet. The right wing has won through intimidation.”

Obama’s Failure as a Leader July 22, 2009

Posted by rogerhollander in About Barack Obama, Barack Obama, Foreign Policy, War.
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Roger Hollander

www.rogerhollander.com, July 22, 2009

To quote John Lennon, “Imagine!”  Imagine Barack Obama giving a nationally televised speech on health care reform.  In it he outlines the advantages of a single-payer plan.  He gives the statistical evidence to demonstrate the enormous savings by eliminating private health insurance.  He discusses the German, French, British and Canadian systems.  He acknowledges some drawbacks, but shows clearly how they achieve the fundamental objectives of universal accessibility, choice, and cost savings.  He directly challenges the medical, health insurance and pharmaceutical industries, and exposes their high priced media propaganda for what it is: distortion and lies.  With most American already having a predisposition towards universal coverage, and with the myths dispelled and replaced with hard undeniable facts, the pressure from the public on Congress to achieve a single-payer option would be irresistible.

 

 

Barack Obama wouldn’t be President of the United States today if he hadn’t been the pragmatic, hard-ball, Chicago-bred politician that he is.  His failure, or his inability, or his lack of will – call it what you like – to withdraw from the country’s imperialist (criminal and destructive) war adventures in Iraq, Afghanistan and Pakistan or to hold the Bush administration accountable for its high crimes and misdemeanors is eminently predictable and in entirely in character.  That many expected more, a hell of a lot more, is due entirely to his campaign rhetoric, which was calculated and for the most part fraudulent.

 

But this is no reason to not render critical judgments about the Obama presidency despite the fact that we are still quite early into his tenure.  There is no doubt that we can expect more of the same.  There is a principle to the effect that the practical should be judged by the ideal, and not vice versa.  Following this principle is the keystone of leadership.  President Obama violates this principle on a daily basis.

 

Obama knows what leadership is.  Candidate Obama demonstrated the epitome of leadership as he led the nation to an electoral victory over a McCain/Palin ticket that had the potential to give the country a government even more disastrous than that of Bush/Cheney – virtually inconceivable but true. 

 

He gave the country its first Afro-American president.  However, once elected, he cast off the leadership role as a snake sheds its skin.

 

President Obama is fond of saying something to the effect of not letting the perfect get in the way of achieving the possible.  Politics is the art of the possible, as common wisdom has it.  In other words, judge the ideal by the practical, which is to my mind a cynical and nihilistic form of non-leadership.

 

In a sense, a leader’s role is to remain to a large degree above the fray.  A leader reflects the needs, hopes and aspirations of the people.  A genuine leader is not a power broker.

 

In the U.S. system of government, the Congress makes laws which, once agreed upon by both houses, are presented to the President to sign into law or veto.  Apart from skewing factors such as massive corporate lobbying and the infamous Bush “signing statements” that allowed the President to ignore laws passed by Congress, the system as it has evolved does generate legislation, for better or worse.

 

A president’s role can vary between staying out of the process until a piece of legislation reaches his or her desk, and active participation in creating legislation and stick-handling it through Congress.  In modern times presidents have leaned more towards the latter role, thereby sacrificing their capacity to lead rather than to broker.

 

I would suggest that the proper role for Obama or any other president is to communicate to the general public and to the members of Congress his vision on any given issue that is in the best interests of the nation.  In the case of health care reform, for example, that would be for a single-payer option, which is what Canada and European industrial democracies have had in place for decades or longer (and which, despite being virtually ignored by the mainstream media and subjected to massive campaigns based upon outright falsehoods, most Americans believe in).  But since that is the “perfect” solution in Obama’s frame of thinking, it is “off the table” presumably so as not to hinder a less than perfect but “realizable” option.  This is the way of the defeatism, it is not leadership.

 

In other words, if Obama were a leader rather than a manipulator, he would go over the heads of Congress and speak directly to the people, and let Congress take the consequences for its action or failure to act.  This might entail short term risk (that a flawed reform or no reform at all would result), but surely is the only road to genuine reform in the long term.  Leadership is about taking risks; but what is ironic, not to mention tragic, is that by taking the path of power brokering a deal, the only possible results are either a much less than adequate reform or total failure.  It is also ironic that the entirely self-interested neo-con (Republican) opposition will go for the jugular on the compromised, brokered solution as if it were the ideal solution (so, why not go for broke if you are going to be viciously attacked in any case?).  The pragmatist will argue that the less than adequate reform is an incremental step to genuine reform.  This indeed might be the case were it not for the fact that bastardized reforms are the result of catering to special interests (in the case of health care reform the AMA, the insurance and pharmaceutical industries), who having been victorious in fending off genuine reform will only remain further entrenched and less likely to be defeated in the future.

 

In feudal times there was in some senses a positive relationship between kings and subjects vis-à-vis confrontation with the ruling nobility.  At times a serf could go over the head of his Lord and appeal to the king for justice.  I am no lover of monarchy and only offer this as an analogy.  A president who was a genuine friend of the masses and an ally in their struggles with enormous economic interests and compromised legislatures would be a sight to behold.

 

The problem, of course, is that the President is just as compromised as the legislatures with respect to the funding required to gain a nomination and to launch a successful presidential campaign.  What I find so insidious about the Obama (full disclosure: I voted for him, the alternative was too scary, but I can understand those who bit the bullet and voted for Nader) is that he promoted himself and catapulted himself to the presidency by pretending to be a leader.  I have to confess that in spite of my better judgment, there was a part of me that wanted to believe him.  This may have been naïve on my part, but at least I kept it to myself.

Rep. Dennis Kucinich on His Battle With the Banks December 15, 2008

Posted by rogerhollander in Economic Crisis.
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www.truthdig.com  

Dec 15, 2008

Dennis Kucinich
AP photo / Kevin Wolf

By Rep. Dennis Kucinich

Once they were as gods, but the deities of the American banking system are now in ruins, plunged from their pedestals into the maw of taxpayer largesse. Congress voted to give the banks $700 billion, lifting them temporarily out of their sepulcher of debt, while revealing a deep truth about the condition of America’s financial powers:

They never had the money they said they had as they constructed their debt-based monetary system which now lies in ruins. Their decisions on behalf of depositors, shareholders and investors were lacking in basic integrity and common sense. Green gods bailing out with their golden parachutes. 

There was a time when their power was real. Come with me to Cleveland 30 years ago today.

Dec. 15, 1978, Cleveland, Ohio

I awoke to find a curt payment demand that was dropped on my front step by a grandfatherly man who supplemented his Social Security delivering the morning newspaper. The headline plastered across the front page:

Cleveland Trust: Pay Up. Bank would relent if Muny Light were sold, Forbes believes.

One of America’s largest banks, Cleveland Trust, led local banks in demanding immediate payment from the city by midnight, Dec. 15, of $14.5 million in short-term loans.

I regarded the headline skeptically. Having lived in 21 different places by the time I was 17, including a couple of cars, I had come to an encyclopedic knowledge of dun letters, sent to my parents by battalions of bill collectors seeking immediate payment for televisions, cars and a variety of household appliances that never seemed to work. I first came to regard these credit alarms with trepidation, later with impassiveness, with the expectation that as our family grew to two adults and seven children it would soon be on the move again, incurring new delinquencies with each new address. Lack of access to money, housing and credit seemed to be a permanent condition.

Now, having fought through a thicket of consequence to become America’s youngest mayor, elected on a promise to stop the privatization of the city’s electric system, I was faced with paying off loans taken out by the previous mayor, for the financing of municipal projects of dubious value.

The banks refused to extend terms of payment and connived with City Council members to block alternative payment plans, such as the sale of city land or tax revenues. The banks knew the city couldn’t otherwise pay. They demanded instead the sale of the city’s electric system, Muny Light, to an investor-owned electric company, the Cleveland Electric Illuminating Co. (CEI).  The president of the Cleveland Council, George Forbes, had met with the head of Cleveland Trust bank, who insisted on the sale of Muny Light as a precondition for extending the city credit. This was a case of the bank blackmailing the city, pure and simple.

The alternative to accepting the bank’s blackmail was default. Cleveland could become the first city since the Depression to default on its financial obligations. Cities rely on credit for everyday operations and for meeting long-term financial obligations, such as infrastructure improvements. If banks called in their loans, the city would head toward dire straits. No one knew that better than the law firm of Squire Sanders and Dempsey, which had served as bond counsel for the city of Cleveland while the city entered fiscal peril and was simultaneously, though not coincidentally, the principal law firm for the Cleveland Electric Illuminating Co. Through Squire Sanders and Dempsey, CEI had access to the intricacies of the city of Cleveland’s financial records.

Under the previous administration, the city began using bond funds for general operating purposes. As mayor, I inherited $40 million worth of debt that had to be refinanced before the end of my first year in office. Under my predecessor, the city had illegally spent money it did not have, and yet it had the key to every bank in town and the confidence of the bond rating houses, at precisely the same time it was preparing for the sale of the municipal electric system to CEI.

 

 

Cleveland Trust and another bank demanding the sale of Muny Light, National City, were principal stock owners in CEI. Several members of CEI’s board sat on the boards of local banks as interlocking directorates. There was a myriad of bank-utility business relations. Cleveland Trust bank, which handled CEI’s demand deposits, pension funds and other assets, would directly profit from the sale of Muny Light. In a way, the banks were the private utility. With the sale, CEI would have an electricity monopoly in Cleveland and would be able to name its price for electricity and get it. Everyone in the Muny Light territory would receive at least a 20 percent rate increase as the rates would be raised to CEI’s levels.

The city was self-sufficient with Muny Light for many years. Muny provided power to 46,000 homes with low electric rates, which contributed to the economic growth of the city. That was until the late 1960s and early ’70s, when a series of suspicious mechanical failures and power outages diminished the system’s reliability. At that time, under heavy lobbying from CEI, the Cleveland City Council delayed the passage of legislation for $9.8 million in repairs to Muny Light’s generators, thereby forcing the city to purchase power at a premium from its competitor, CEI. The city became increasingly dependent on an interconnection between CEI and Muny Light, a high-voltage line over which power could be transferred from CEI to the city, to ensure reliability. The city’s power system began to experience more unexplained power failures. CEI began to make public overtures to purchase Muny Light. The sale of Muny Light to CEI was soon supported by most of Cleveland’s media, business, political and labor interests. 

In November 1976, the City Council passed legislation authorizing the sale of Muny Light for a fraction of its value. I was clerk of Cleveland’s Municipal Court at the time and I objected to the sale. I was advised that there was no way to stop the sale, but I saw it differently. Cleveland had a long history of municipal power. I could sense a terrible injustice was being visited upon the people of the city by its leading institutions, which were conspiring to deprive the city of its public power system.

I organized a petition drive that attracted support from city neighborhoods served by Muny Light. A full civic campaign was born with an intense effort made under brutal weather conditions to gather the signatures necessary to put the issue on the ballot. There was much at stake besides the monetary value of the system: The people’s right to own an electric system. And the historic position of Muny Light, one of America’s first municipal electric utilities, founded 70 years earlier by Cleveland Mayor Tom Johnson. Muny Light provided electricity to about one-third of the homes and businesses in the city at a peak savings of 20-30 percent over the rates charged by CEI. Additionally, Muny Light provided millions of dollars annually in savings to taxpayers by serving 76 city facilities. It also provided Cleveland’s street lighting. High electric rates and higher taxes would follow if Muny were sold. The private sector was forcing the sale for its own profit at the expense of the community.

On Jan. 4, 1977, the Atomic Safety and Licensing Board (ASLB), in an antitrust review required of any company applying to operate a nuclear power plant, ruled that CEI had conspired to put Muny Light out of business. CEI tried to force Muny Light into price-fixing and blocked Muny expansion, stopped the installation of Muny Light pollution-abatement equipment and forced the city to buy power it didn’t need. In addition, the ASLB uncovered a CEI budget planning report for 1971 that spoke of a five-year plan “to reduce and ultimately eliminate” Muny Light.

The ASLB determined that CEI deliberately caused a Christmas-season blackout on the Muny Light system and sent salesmen into Muny Light territory offering “reliable CEI service.” The private utility illegally tripled the cost of purchased power, thereby driving up Muny Light’s operating costs. CEI illegally blocked Muny Light’s access to power from other companies, all in violation of federal antitrust law. As a condition of receiving its license to operate a nuclear power plant, CEI had to provide Muny Light with access to cheap power. Documents showed that CEI executives believed the purchase of Muny Light would increase CEI’s earnings by $2.732 a share, eliminate a competitive threat, and push the company’s growth rate to 10 percent, further enhancing investment.

Documents in the case also demonstrated CEI’s successful attempts to subvert media editorial policy through cunning use of the company’s large advertising budget. Over the years, several local reporters lost their jobs after writing reports unfavorable to CEI, and CEI bragged internally about placing verbatim company-written propaganda as general media editorial content.

Confronted with the federal finding that bolstered a previously filed $330 million antitrust damage suit, the Cleveland city administration’s response was incredible: “Now CEI has to buy Muny Light!”

At the same time the campaign to sell Muny Light accelerated, a high-powered rifle shot ripped through my house, just missing my head.

A cavalcade of media editorials commenced favoring the transfer of Muny Light to CEI. 

During an ensuing legal battle over the validity of the referendum petitions, I became a candidate for mayor. I promised that if elected I would save the system. I won the election. My first act in office was to cancel the sale of Muny Light. I next had to pay off a $14 million CEI electricity bill that the previous administration owed and wanted to satisfy through the sale of the light system.

I had been in the mayor’s office barely a year, facing a municipal horror story of huge snow storms, massive water main breaks and a police strike. I had cut city spending by 10 percent through eliminating corrupt contracts, payroll padding and attritional cutbacks. Through the year, I struggled with a recall attempt for firing a police chief. The recall was backed by banks, utility and real estate interests with a last-minute appeal printed by the Plain Dealer to sell Muny Light. Credit rating agencies, which had looked the other way while CEI was attempting to gain Muny Light in the previous administration, downgraded the city’s finances.

Another Muny Light-related attempted assassination was averted when I was rushed to a hospital vomiting blood from a profusely bleeding ulcer. Some years later, a congressional investigation produced information from an undercover agent of the Maryland State Police that the assassination attempt was to occur while I was the grand marshal in a local parade. A local television investigative report claimed the assassin’s services were purchased because I refused to sell the electric system.

One month later, I was back at work trying to find a way to save Muny Light. The utility’s financial difficulties, though contrived largely through interference with the system by CEI, were depicted as so overwhelming that only the sale of the electric system itself would save the city from financial catastrophe. I held several meetings with bank officials. and it became clear we were heading for trouble on the question of refinancing. The banks were going to try to force me to sell the electric system. I went public with a plea for an income tax increase to protect the city’s solvency.

On Dec. 15, I made a last-minute appeal to Cleveland Trust. It was 8 o’clock in the morning. I met with Brock Weir, the chairman of Cleveland Trust, Council President Forbes and our host, a local businessman. I had the intention of protecting Muny Light and avoiding a default.

“There’s just one thing you’ve got to do,” said the Council president, who strongly favored the sale.

Weir, the bank CEO with the stern visage: “If you sell Muny Light, we’ll roll over the notes. I can get you $50 million in new financing. We’d get other banks to participate.” It was a bribe.

My thoughts went to the street just outside the boardroom. Some 20 years earlier, a few blocks from where this meeting was taking place, I slept with my brothers and sister and parents in a car, homeless. I remembered an apartment where my parents sat underneath the pale yellow light of a kitchen wall lamp, counting their pennies on an old porcelain-topped table. The pennies dropped, click, click, click. Pennies to pay the utility bills.

It matters how much people pay for electricity. It matters if the public owns its own system and has political and financial control over rates. I could hear the pennies dropping, click, click, click, as Mr. Weir insisted on the sale of Muny Light. I remembered my family and the struggles of people like them. I couldn’t do it. I couldn’t sell. Not for $50 million, not for anything.

“I’m not going to sell, even if it means my career,” I said, as Council President Forbes looked on in surprise.

“Why do you want to end your career? Sell the system. Get rid of it!” he said.

“Is there some other way we can work this out?” I asked Brock Weir.

He shook his head “No.”

Throughout that day, every media outlet in Cleveland echoed the sentiment of Cleveland Trust’s chairman, including the morning newspaper headline, with such depth of coverage and intensity that it seemed the city itself would crumble unless I agreed to the sale, which also included a provision dropping the $330 million antitrust damage suit. 

The objective condition of the city’s finances received no honest review. The sale of Muny Light was depicted as the only way the city could avoid fiscal disaster. The majority leader of the City Council held a news conference live on the 6 o’clock news. He declared that if I sold Muny Light, “the chairman of the Cleveland Trust bank has informed the council that his bank will purchase $50 million worth of city bonds. So, in effect, we have a plan sitting on the mayor’s desk that will absolutely end the city’s financial problems, if he will put his signature on it.”

The $50 million bribe had been brought out into the open in a manner that now suggested it was a legitimate offer, a fake solution to a fake crisis. I refused to sell.

As Cleveland television stations covered the event live, with a countdown clock that looked like a twisted version of New Year’s Eve, midnight struck. Television networks of several countries recorded the grim event: The city of Cleveland became the first American city to go into default since the Great Depression. The default was over just $14.5 million dollars in credit.

When I called for a congressional investigation a few days later, Cleveland Trust denied it wanted Muny Light, CEI denied it wanted Muny Light, the council president denied the chairman of Cleveland Trust wanted Muny Light, and the majority leader said he was mistaken when he said live on the 6 o’clock news that the bank chairman offered $50 million in credit for Muny Light. Muny Light was no longer the issue. It was the mayor and his obstinacy that caused the crisis. So went the waltz into a netherworld devoid of truth, justice, reality or morality.

Though the people of Cleveland supported keeping Muny Light by a margin of 2 to 1 in a referendum a few months later, and passed an income tax increase by the same margin in order for the city to pay off the defaulted bond anticipation notes, the state of Ohio intervened and put the city into fiscal receivership. I lost the mayor’s race in 1979. The banks renegotiated the defaulted notes, at a profit. The city lost its antitrust suit against CEI in 1981, in a hung jury. An appeal failed.

I was out of major public office for almost 15 years until, in 1993, Cleveland announced an expansion of Muny Light (now called Cleveland Public Power). At that time, the City Council and others decided that I had made the right decision in refusing to sell Muny Light. The city and its residents had saved hundreds of millions of dollars through Muny Light’s reduced electric rates and the savings the taxpayers enjoyed from Muny’s lower-cost power for street lighting and city buildings.

I attempted another political comeback and this time succeeded, getting elected to the state Senate with the motto: “Because he was right.” My campaign literature showed a radiant light bulb behind my name. Two years later, I was elected to Congress, with the slogan “Light up Congress.” Today I am the chairman of the House Government Oversight Domestic Policy Subcommittee, which has broad jurisdiction over most government departments and agencies, including the Nuclear Regulatory Commission, and electric utility matters generally.

The Cleveland Electric Illuminating Co. is now a subsidiary of First Energy Co., which was fined by the NRC for various safety violations and, a few years ago, was found to have primary responsibility for the 2003 blackout that left 50 million people throughout the northeastern United States without electricity.

Cleveland Trust no longer exists. No other bank involved in the default survives, except for National City, which next week faces extinction through shareholder approval of a takeover by PNC bank. I have spent much time trying to save National City. 

One newspaper, the Cleveland Press, which advocated that CEI be Cleveland’s sole electricity provider, ceased publication. The other strong proponent of the sale of Muny Light, the Plain Dealer, struggles to survive.

The city’s electric system endures and this past year celebrated its 100th anniversary. 

George Eliot (132 Years Ago) on the Bush Administration December 1, 2008

Posted by rogerhollander in Art, Literature and Culture, George W. Bush.
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It is a common sentence that knowledge is power; but who hath duly considered or set forth the power of Ignorance?  Knowledge slowly builds up what Ignorance in an hour pulls down.  Knowledge, through patient and frugal centuries, enlarges discovery and makes record of it; Ignorance, wanting its day’s dinner, lights a fire with the record, and gives a flavour to its one roast with the burns souls of many generations.  Knowledge, instructing the sense, refining and multiplying needs, transforms itself into skill and makes life various and with a new six days’ work; comes Ignorance drunk on the seventh, with a firkin of oil and a match and an easy “Let there not be” – and the many-coloured creation is shriveled up in blackness.  Of a truth, Knowledge is power, but it is a power reined by scruple, having a conscience of what must be and what may be; whereas Ignorance is a blind giant who, let him but wax unbound, would make it a sport to seize the pillars that hold up the long-wrought fabric of human good, and turn all the places of joy dark as a buried Babylon.  And looking at life parcelwise, in the growth of a single lot, who having a practiced vision may not see that ignorance of the true bond between events, and false conceit of means whereby sequences may be compelled – like the falsity of eyesight which overlooks the gradations of distance, seeing that which is afar off as if it were within a step or a grasp – precipitates the mistaken soul on destruction?

 

 

Mary Ann Evans Cross (George Eliot), “Daniel Deronda,” (1876) Signet Classic paperback, 1979, p. 202, 203.

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