It’s Not Just In Washington

It seems as if the rule of law is under assault everywhere.

A recent story by Reveal, a nonprofit news organization, alleges that during the competition for Amazon’s second headquarters, the state made four safety citations against the company “go away.” (I find it illuminating–and incredibly depressing– that the Indianapolis Star simply published Reveal’s investigative report. It’s just one more bit of evidence that the Star itself no longer has the capacity to engage in investigative journalism or fulfill its watchdog role.)

When an Amazon worker was killed by a forklift in a Plainfield warehouse in 2017, the state of Indiana’s investigator found the company was at fault. The state cited Amazon for four major safety violations and fined it $28,000.

But an investigation by Reveal from The Center for Investigative Reporting has found that, as Gov. Eric Holcomb sought to lure Amazon’s HQ2 to Indiana, state labor officials quietly absolved Amazon of responsibility. After Amazon appealed, they deleted every fine that had been levied and accepted the company’s argument — that the Amazon worker was to blame.

The investigator on the case, John Stallone, had arrived at the warehouse a day after 59-year-old Phillip Lee Terry was crushed to death. He was so troubled by the pushback he was getting from higher-ups that he secretly recorded his boss, Indiana OSHA Director Julie Alexander, as she counseled the company on how to lessen the fine.

“It’s like being at a card table and having a dealer teach you how to count cards,” Stallone said.

Stallone is quoted as saying that pressure to back off came from “as high up as the governor’s mansion.”

The governor has reacted angrily, sending Reveal and the Star an intimidating “cease and desist” letter, and insisting that he was not involved in handling the dispute. The officials at the labor department have thus far declined to be interviewed.

According to Reveal,

Indiana OSHA issued four serious safety citations, for a total fine of $28,000. Stallone sought more, but he was getting pushback. On Nov. 20, 2017, Stallone joined his boss, Julie Alexander, the Indiana OSHA director, as she called Amazon officials. He secretly recorded the conversation, which is legal in Indiana, and shared the recording with Reveal.

During the call, Alexander told the Amazon officials what she’d need from them in order to shift the blame from the company to “employee misconduct,” according to the recording….

Some days after the conference call with Amazon officials, Stallone said Indiana Labor Commissioner Rick Ruble pulled him into his office. The governor was there, too, standing by the commissioner’s desk, according to Stallone.

He recalled that Holcomb told him how much it would mean to Indiana if the state won the Amazon headquarters deal. Then, Stallone said, the commissioner told him to back off on the Amazon case — or resign.

Stallone did resign, and reported the situation to OSHA.

The same day Stallone sent his whistleblower email, Amazon’s corporate offices in Seattle gave a $1,000 campaign contribution to Indiana’s governor. It was years before Holcomb would next face reelection, and Amazon hasn’t donated to him before or since.

Perhaps–as the Governor and labor officials insist– Stallone is just making entirely innocuous actions seem nefarious, although it is difficult to imagine what his motive might be. Or perhaps, the prospect of winning Amazon’s headquarters–or at the very least, avoiding measures that might make the state less competitive–persuaded the Governor and other officials to make an exception to the rules.

These days, everywhere you look, exceptions are swallowing the rules.

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If This Is True…

When I was much younger, I naively believed that endemic corruption was only a problem in other countries–that America would of course have its share of slimy folks, but their influence would be episodic, not part of the culture.

My experience with Indianapolis’ municipal government was consistent with that conviction.

I began to question whether I could generalize that experience when–as a lawyer in private practice–I represented real estate developers and had occasion to interact with lenders from states like New Jersey, where I was astonished to discover it could take a couple of years and some dubious “arrangements” to get a building permit. (At the time, you could pull such a permit in Indianapolis in a day or two.)

These days, watching the Trump Administration is a Master Class in sleaze. As we learn more about the backgrounds of the people Trump has installed in cabinet and White House positions, it becomes more and more apparent that they aren’t new to corruption and self-dealing (just google “best people” sometime…). Presumably, that’s why Trump feels comfortable with them–they are “his kind of people.”

Then there’s Rudy Guiliani. It appears that Trump’s “you scratch my back and I’ll scratch yours” relationship with his “personal lawyer” goes back some years as well–at least to 1988. According to Daily Kos,

U.S. Attorney Rudy Giuliani had FBI Agent Tony Lombardi end the FBI’s investigation on Trump money laundering.  A few weeks later, Donald Trump raised $2 Million for Giuliani’s mayoral campaign.  Quid Pro Quo?

Now, Daily Kos is not an unbiased news source. It definitely leans Left. But its political preferences tend to dictate what it chooses to report, and how it reacts to actual “facts on the ground.” To the best of my ability to tell, it doesn’t engage in Fox-like distortion/invention.

Here are relevant portions of the rest of the post:

Journalist, and author, Wayne Barrett writes in his 2016 article:

Tony Lombardi, the federal agent closest to then-U.S. Attorney Giuliani, opened a probe of Trump’s role in the suspect sale of two Trump Tower apartments to Robert Hopkins, the mob-connected head of the city’s largest gambling ring.

Barrett explains:

The government subsequently nailed Hopkins’ mortgage broker, Frank LaMagra, on an unrelated charge and he offered to give up Donald, claiming Trump “participated” in the money-laundering — and volunteering to wear a wire on him….

Lombardi, who discussed the case with Giuliani personally (and with me for a 1993 Village Voice piece called “The Case of the Missing Case”), went straight to Donald for two hour-long interviews with him. Within weeks of the interviews, Donald announced he’d raise $2 million in a half hour if Rudy ran for mayor. LaMagra got no deal and was convicted, as was his mob associate, Louis (Louie HaHa) Attanasio, who was later also nailed for seven underworld murders. Hopkins was convicted of running his gambling operation partly out of the Trump Tower apartment, where he was arrested.

Lombardi — who expected a top appointment in a Giuliani mayoralty, conducted several other probes directly tied to Giuliani political opponents, and testified later that “every day I came to work I went to Mr. Giuliani to seek out what duties I needed to perform” — closed the Trump investigation without even giving it a case number. That meant that New Jersey gaming authorities would never know it existed.

I guess the old adage “it isn’t what you know, it’s who you know” was certainly true in New York’s white-collar crime community.

This was 1988. More evidence, as if we needed it, that Guiliani was never entitled to be called “America’s Mayor,” that Trump’s venality is nothing new, and that my naiveté was just that.

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Charities Take A Hit

Yesterday was “giving Tuesday,” and inboxes everywhere were inundated with solicitations, prompting me to consider America’ charitable landscape.

I had recently come across a July, 2019 article published by Marketwatch (not exactly a Marxist publication), reporting the effects of the Republican tax bill on charitable giving. The lede tells the story:

New data on Americans’ tax returns adds to the growing body of evidence that charities are taking a hit as a result of Trump’s overhaul of the tax system.

Taxpayers have itemized $54 billion less in charitable contributions so far this tax season compared to the previous year, according to new IRS stats.

The tax act–signed by Trump in December of 2017– doubled the standard deduction. (As most readers of this blog are aware, the standard deduction is the amount taxpayers can  subtract from taxable income to reduce their tax bill, without having to itemize.) Taxpayers can still choose to itemize, but there’s less incentive to do that. Nonprofit scholars predicted at the time that a higher standard deduction would lead to fewer taxpayers itemizing, and that, in turn, would lead to fewer people making charitable donations in order to get a deduction.

Of course, the lack of reported donations doesn’t necessarily mean a lack of actual donations; it is highly likely that people accustomed to giving smaller amounts, or contributing to favorite causes, have continued doing so despite the lack of a tax incentive.

Studies do suggest, however, that charitable giving has taken a not-insubstantial hit. (1.7% doesn’t sound like much, but when the numbers are this big, it represents a significant chunk of change.)

Charities took in an estimated $427.71 billion overall in 2018. When adjusted for inflation, the figure represented a 1.7% decline in overall giving, according to Giving USA, an annual report on philanthropy released last month. The Giving USA estimates are made before final tax data is available, and its estimates are revised and updated as final tax return information about itemized deductions made by individuals, corporations, and estates becomes available.

The data on which the article is based is only for a part of the first year following the passage of the new tax law, and the long-term effects remain to be seen. But the dollar amount of private-sector support for charities is only one element of a charitable landscape that gets far less attention than the dollars involved.

For example, stories about charitable donations rarely point out that, in the United States, we depend upon nonprofit and charitable organizations to address what economists call “government failure.” (We learn about “market failure” in Econ 101. Less attention is paid to the concept of “government failure.”) In other words, Americans expect charity to respond to a number of social needs which in other countries are met by government programs.

A lot of what U.S. tax law considers “needs” sufficient to justify a tax exempt status are appropriately left to the private sector, but to the extent such needs are real and pressing and widely seen as collective responsibilities, a reduction in charitable giving can cause significant hardship.

Muddying the waters even further is the lack of a bright line between genuinely charitable organizations and profit-making ventures sufficiently “on the line” that they are able to obtain a 501 c 3. Is the hospital that pays its chief executive 400,000+ a year simply distributing what would otherwise be profit as salaries? Are donations to the school’s Little League team truly charitable contributions? What about the gift shop or car wash run by the church?

How elastic is our definition of “charity”?

One of these days (clearly not in my lifetime), American lawmakers are going to have to clarify some things: what are the social welfare services that government must provide? What privately-sponsored endeavors are truly charitable, and deserving of tax-exempt status, and which don’t justify the incentive?

Answering those questions is obviously less critical than ridding ourselves of the loopholes/subsidies that allow businesses like Amazon to avoid paying any tax at all on huge profits–but that doesn’t mean they are unimportant.

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Pardons And Predatory Loans–A Day In Trumpland

Like a broken record, I keep coming back to one question: what can his supporters be thinking? 

In just one November week, the President of the United States pardoned three war criminals and endorsed a measure facilitating predatory payday loans. A report in Talking Points Memo has details of both.

President Trump’s pardons: “Sheriff Joe” Arpaio. Michael Behenna. And this week, three convicted or accused murderers: Army 1st Lt. Clint Lorance and Maj. Mathew Golsteyn, both of whom Trump pardoned, and Navy SEAL Eddie Gallagher, who Trump granted clemency.

Gallagher, the best-known of the trio, was acquitted of charges that he murdered an teenage Islamic State captive. But he was convicted of posing with the boy’s body. And his own SEALs testified against him, including SEAL Dylan Dille, who testified that he witnessed Gallagher shoot innocent people with a sniper rifle. Another SEAL under Gallagher’s charge testified, “I shot more warning shots to save civilians from Eddie than I ever did at ISIS.”

 “I stuck up for three great warriors against the deep state,” Trump said Tuesday. In this case, that apparently means the Defense secretary, the (fired) Navy secretary and military prosecutors.

If Secretary of the Navy Richard Spencer, who was forced out over his strong denunciation of the pardons, is a member of the “deep state,” then we need more deep state operatives.

In his letter to Defense Secretary Mark Esper, Spencer criticized Trump for interfering on Gallagher’s behalf.

“…I no longer share the same understanding as the Commander in Chief who appointed me, in regards to the key principle of good order and discipline,” he wrote. “I cannot in good conscience obey an order that I believe violates the sacred oath I took in the presence of my family, my flag and my faith to support and defend the Constitution of the United States.”

Among the multitude of concepts that elude our Moron In Chief is the fact that his pardons endanger American troops. If we do not obey the rules of “good order and discipline,” our antagonists will feel no compunction to treat American prisoners humanely. You can visit Lawfare for a perceptive discussion of the other damage these pardons do.

Allowing lenders to profit from imposing outrageous interest rates on those least able to pay them may not be as monumentally evil as encouraging war crimes, but it is appalling nonetheless.

Want to make payday loans in states where it’s outlawed? Rent a bank! Laws governing interest rates on predatory loans vary widely from state to state. Predatory lenders hate that. They want to be able to charge 120% APR in Colorado just like they do in, say, Wisconsin. How do they do that now? They use the bank in Wisconsin to process a high-interest loan that, in all other respects, was effectively carried out through a storefront in Denver. Yes, this really happened, and yes, the Trump administration has taken the banks’ side in the ongoing legal battle.

A 2015 court decision has hampered this effort somewhat for predatory lenders, but the FDIC and the Comptroller of the Currency want to change that, announcing a proposal that would actively promote the practice.

FDIC Chair Jelena McWilliams “is doing the bidding of loan sharks who have a decades-long history of trying to get around state consumer protection rules,” Americans for Financial Reform spokesperson Carter Dougherty observed. “And now a federal regulator is helping them do it.”

These two actions weren’t the only measures the administration took that week to unravel safeguards and undermine the rule of law, but even if they were–even if they stood alone–how do Trump’s supporters defend them? What sort of people continue to wear their MAGA hats, and proclaim that Trump was “chosen by God” and “a better President than Lincoln?”

The only answer I can come up with is: people who believe in a God who wants White Christian men to dominate others, and people who still resent Lincoln for freeing the slaves. (They were, after all, black people.)

I always knew there were some people who held these views. What is heartbreaking is that there are so many of them.

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Indiana Doesn’t Do New

Residents of Indiana’s urban areas will tell you that one of the more annoying features of Hoosier life is a state government in thrall to rural interests.

Indiana has a significant urban/rural cultural divide. Our legislature–which for years has been gerrymandered in ways that significantly favor rural Republican areas–resents the fact that Indianapolis is the state’s economic driver, and routinely screws us over.

State agencies, for their part,  vary in their approach to the needs  of urban Hoosiers.

Nowhere is the disconnect between state and city more striking than the incomprehension of urban realities displayed by Indiana’s Department of Transportation. I’ve posted previously about the conflict between the city and the state over the latter’s planned repair of the aging interstates that cut through and deface residential and historic districts in the central city.

When I read this recent article from Forbes, I thought about the reluctance of Indiana’s DOT to actually engage with the group of planners, architects and residents who came together to try to explain why elevated highways, interchanges and walls designed for country interstates create huge problems in cities.

The interstate highway system is over 50 years old and many portions of the system need repairs or upgrades. As we debate the future of the interstate highway system in light of advances in smart infrastructure and autonomous and electric vehicles, it’s worth considering whether some portions of the system should be removed, especially urban portions that are underused or harmful to the vitality of cities.

The article recognizes and recounts the many benefits of the Interstate system. Interstates have played an important part in the nation’s economic growth. But as the article notes,

The highway system is great for facilitating travel between metro areas and states and faster travel times are what make the system so valuable. But the system doesn’t need to be in its current form to serve this purpose. Several stretches of highway within cities’ boundaries do little to facilitate inter-state travel and come with a host of negative impacts on the cities that contain them….

Economist Nathaniel Baum-Snow estimates that on average the construction of one interstate highway through a central city caused an 18% drop in that city’s population between 1950 and 1990. The economic explanation is that the highway decreased commuting times, which allowed people to live farther from the city. Furthermore, the decrease in the price of commuting freed up money that could be used on other things, including more space. And since people really value space—think about how the average home size changes with income—this increased the demand for space and led to more suburbaniza­tion and a decline in population density as people consumed more land and built bigger homes.

Population loss wasn’t the only result of highways running through the cores of cities. Entire neighborhoods were razed to make room for highways, destroying homes, businesses, and urban amenities….Highways also became barriers between neighborhoods, cutting people off from job opportunities and retail options. There’s also evidence that air pollution from highways negatively impacts student outcomes in nearby schools.

Highways that bisect cities create barriers that hinder interactions between people on either side. They also take up valuable real estate that could be used for more housing, businesses, or amenities, such as parks, that make cities more appealing places to live and work.

The article’s conclusion, ironically, echos the approach preferred by Indianapolis and rejected by the state’s DOT. (In fairness, DOT did retreat from its original plan to add lanes and huge buttressing walls…)

Several highways running through cities could be removed without adversely affecting the overall system, and removal would clear the way for a new period of urban revitalization. A system of smaller, lower-speed boulevards would still enable travel through city centers without the noise, pollution, and unsightliness of today’s high-speed highways. It’s time to try something new.

And I’m sure some states will actually work with their cities to do that. Indiana, not so much.

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