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Archive for the ‘Biden administration’ Category

Why is Ghislaine Maxwell’s Lawyer Attacking Antitrust Enforcers?

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Matt Stoller writes at Big:

In 2017, reporter Jesse Eisinger came out with a book with the best title about the Department of Justice’s sorry track record during the financial crisis. It was called “The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives.” The title comes from a 2002 anecdote about James Comey, who was then running the lead prosecutorial unit in the prestigious Southern District of New York.

The story went as follows. Comey asked the assembled litigators which ones won every case. A bunch of hands went up, along with expectations of praise for what fine litigation skills their winning records implied. But Comey did not offer praise, instead he told them that a perfect record suggested not skill but cowardice. Attorneys who never lost cases were members of ‘the Chickenshit Club,’ because such a record meant they were picking easy cases, rather than risking failure.

Eisinger used this metaphor to describe the collapse of justice and law in America over the course of forty years. From the Savings and Loan crisis in the 1980s, when thousands of bankers went to jail to the Enron scandals where lead executives were found guilty under George W. Bush, the DOJ had some ability to levy charges of justice against the powerful, to send them to jail. This capacity weakened. By the time of the financial crisis, and afterwards, including over monstrous crimes such as the opioid killing spree caused by the billionaire Sackler family, neither the Obama nor Trump administration’s DOJ held anyone accountable, even as prosecutors sent millions of poor people to jail.

There are many reasons for this shift. Of course there is the revolving door to big law, that network of fancy law firms that mints millionaires of former government officials. Big law is deeply problematic; I’ve long noted how these firms actively encourage firms to break the law, even in their marketing materials. But big law has always existed, so this doesn’t explain the change over time. There was the political dimension; the Obama and Trump DOJ actively cut deals for the Sacklers, for instance, at the behest of Rudy Giuliani and Mary Jo White. But such a collapse among enforcers is also a result of a degraded culture of deference to the powerful among public servants, an institutional fear of losing. I think this change is the most important and most insidious, because it pervades much of our government.

This week, the Antitrust Division is beginning to leave the Chickenshit Club. Because they are now willing to use the same standards of justice against white collar criminals that poor Americans receive, even if it means losing cases in front of juries. That’s a big claim, but I think a reasonable one. There were three criminal cases brought by the DOJ Antitrust Division decided over the past two weeks, tough cases breaking new legal and political ground. And while the Antitrust Division only lost one outright, in none of them did the prosecutors convince a jury any of these executives violated the antitrust laws. For lawyers who work for months or years prepping for a trial, this was a very tough couple of weeks.

In the most prominent case, the Division tried the powerful, politically connected CEO of DaVita Inc., a dialysis firm, for conspiring with DaVita’s competitors to suppress competition for senior-level employees by agreeing not to solicit them for each other’s companies. He was acquitted. They also tried chicken firm executives for price-fixing. The jury couldn’t make up its mind, and wouldn’t convict, though that one will be tried again. Finally, in the case against a physical therapy staffing company, the jury acquitted the defendants for wage-fixing, though did find one of them guilty of obstruction of justice.

These losses really hurt, but the Antitrust Division lost in a smart way. In terms of the legal precedent, in a stage before the jury heard the case, prosecutors established that wage-fixing is a crime and a violation of the Sherman Act. That’s a huge legal victory, even if they couldn’t get a jury to convict. But then there’s the jury, which refused to see such actions as criminal. I’m not sure why juries went the way they did, but if I had to guess, it’s probably because cheating has become normalized in American culture, so people have a tough time viewing stealing from your employees as crime. But that’s a matter of presentation. The Division has already announced it will continue to indict more executives for antitrust violations around labor, and will eventually figure out how to convey to juries that it’s illegal to steal from your employees by preventing them from accessing other job opportunities or illegally suppressing wages.

Losing two tough cases while breaking new legal ground is impressive, and shows a change in the rank careerism at the DOJ. But I’m most impressed by the chicken price-fixing case. After the second hung jury, the Division said . . .

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Written by Leisureguy

23 April 2022 at 7:37 pm

Bad-faith Republican politicians

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I’m sure that not every Republican politician operates in bad faith — for example, holding up Obama’s Supreme Court nominee for 9 months because the election was “too close,” and then rushing through Trump’s nominee Amy Coney Barrett’s immediately before another election. But many do show tremendously bad faith and also seem determined to make the US fail. Heather Cox Richardson points out a prime example:

“Democrats need to make more noise,” Senator Brian Schatz (D-HI) told Greg Sargent of the Washington Post. “We have to scream from the rooftops, because this is a battle for the free world now.”

Sargent interviewed Schatz after the senator called out Senator Josh Hawley (R-MO) on the floor of the Senate on April 7 for the profound disconnect between the Republican senator’s speeches and his actions. Hawley has placed a hold on President Joe Biden’s uncontroversial nominee for an assistant secretary of defense, saying that Biden’s support for Ukraine was “wavering” and that he wasn’t doing enough.

Of course, the Biden administration has been central to world efforts to support Ukraine in its attempt to hold off Russia’s invasion. Just today, Biden announced an additional $800 million in weapons, ammunition, and other security assistance to Ukraine. In contrast, Hawley voted to acquit former president Trump of abuse of power and obstruction of Congress when he withheld $391 million of congressionally approved aid to Ukraine in order to pressure Ukraine president Volodymyr Zelensky to cook up a story about Hunter Biden.

Hawley’s bad-faith argument goes beyond misleading statements about aid to Ukraine. Hawley has vowed that he will use his senatorial prerogative to hold up “every single civilian nominee” for the Defense Department unless Secretary of Defense Lloyd Austin resigns. He has vowed the same for the State Department, demanding the resignation of Secretary of State Antony Blinken.

Hawley says his demands are because of the withdrawal from Afghanistan; he also said that Biden should resign. This is a highly unusual interference of the legislative branch of government with the executive branch. It also means that key positions in the departments responsible for managing our national security are not being filled, since Senate majority leader Chuck Schumer must use up valuable floor time to get nominations around Hawley’s holds.

In February, for example, Hawley blocked the confirmation of the uncontroversial head of the Pentagon’s international security team, Celeste Wallander, a Russia expert and staunch advocate for fighting Russian aggression, even while Russian troops were massing on the Ukraine border. Senator Jeanne Shaheen (D-NH) noted in frustration: “He’s complaining about the problems we have in Russia and Ukraine and he’s making it worse because he’s not willing to allow those nominees who can help with that problem to go forward.” (The Senate eventually voted 83–13 to confirm Wallander.)

Hawley is not the only Republican to be complaining about the administration even as he gums up the works.

Texas governor Greg Abbott has ordered Texas state troops to inspect all commercial trucks coming from Mexico after the federal government has already inspected them. Normally, Mexican authorities inspect a commercial driver’s paperwork and then officers from U.S. Customs and Border Protection thoroughly inspect the vehicle on the U.S. side of the international bridge, using dogs, X-ray machines, and personal inspections. At large crossings, officials from the Food and Drug Administration and the Department of Transportation will make sure that products and trucks meet U.S. standards. Sometimes after that, the state will spot-check a few trucks for roadworthiness. Never before has Texas inspected the contents of each commercial vehicle.

Abbott instituted the new rule after the Biden administration announced it would end the pandemic emergency health order known as Title 42. This is a public health authority used by the Centers for Disease Control and Prevention to protect against the spread of disease. It was put in place by the Trump administration in March 2020. Title 42 allows the U.S. government to turn migrants from war-torn countries away at the border rather than permitting them to seek asylum as international law requires.

Abbott said the new rule would enable troopers to search for drugs and smuggled immigrants, which he claims the administration is not doing. But journalists Mitchell Ferman, Uriel J. García, and Ivan Pierre Aguirre of the Texas Tribune report that officers from the Texas Department of Public Safety do not appear to be examining the trucks and have not announced any captured drugs or undocumented immigrants.

Wait times at border crossings have jumped from minutes to many hours, with Mexican truckers so frustrated they blocked the roads from the southern side, as well. Truckers report being stuck in their trucks for as much as 30 hours without food or water. About $440 billion worth of goods cross our southern border annually, and Abbot’s stunt has shut down as much as 60% of that trade. The shutdown will hammer those businesses that depend on Mexican products. It will also create higher prices and shortages across the entire country, especially as perishable foods rot in transit.

On Twitter, Democratic candidate for Texas governor Beto O’Rourke showed a long line of trucks behind him in Laredo and said: “What you see behind me is inflation.” White House press secretary Jen Psaki issued a statement today saying: “Governor Abbott’s unnecessary and redundant inspections of trucks transiting ports of entry between Texas and Mexico are causing significant disruptions to the food and automobile supply chains, delaying manufacturing, impacting jobs, and raising prices for families in Texas and across the country. Local businesses and trade associations are calling on Governor Abbott to reverse this decision…. Abbott’s actions are impacting people’s jobs, and the livelihoods of hardworking American families.”

Tonight, Abbott backed down on his rule, and normal traffic seems to be resuming over one of the key bridges between Mexico and the U.S., but his stunt indicates that Republicans plan to use inflation and immigration as key issues to turn out their base for the 2022 midterm elections. Today, pro-Trump Representative Elise Stefanik (R-NY), who replaced Representative Liz Cheney (R-WY) as the House Republican Conference Chair, the third-highest Republican in the House, tweeted: “We must SECURE our southern border.”

Abbott has also ordered the Texas National Guard to the U.S. border with Mexico to conduct “migration drills” in preparation for an influx of migrants. But Abbott’s use of the 10,000 National Guard personnel last fall for a border operation to prevent an influx of migrants seemed to be a political stunt: it led to complaints from National Guard personnel of lack of planning, lack of pay, lack of housing, and lack of reason to be there.

Abbott has deployed troops in the past while he was under fire for his handling of the coronavirus pandemic and the February 2021 winter storm that left millions of Texans without heat or electricity for days and killed 246. This deflection seemed to be at work last February, too, when Abbott issued a letter saying that . . .

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Written by Leisureguy

13 April 2022 at 10:58 pm

Why Putin Underestimated the West

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Ivo H. Daalder and James M. Lindsay write in Foreign Affairs:

Russian President Vladimir Putin’s decision to invade Ukraine has proved to be a strategic miscalculation of historic proportions. Having failed to produce a quick victory for Moscow, the  unprovoked invasion faces a ferocious Ukrainian insurgency that has already caused some 15,000 Russian combat fatalities, roughly the same number that the Soviet Union lost in its entire nine-year campaign in Afghanistan. The Russian economy has been battered by extraordinary international sanctions. Calls for Putin to be tried as a war criminal have echoed around the world. It is safe to say that none of this was what Putin expected when he launched his attack.

How did Putin get things so wrong? In part, he clearly overestimated Russian military power and underestimated the Ukrainian resistance. But just as important was his misreading of the West. His long personal experience—observing the weak international response to Russia’s wars in Chechnya and Georgia, its annexation of Crimea in 2014, and its support for Syrian dictator Bashar al-Assad—convinced him that the West would abandon Ukraine. Given Europe’s concerns about Washington’s commitment to European security in the wake of both the Trump presidency and the Biden administration’s botched withdrawal from Afghanistan, he may also have anticipated that the invasion would divide the United States and its European allies, thus delivering a larger strategic victory than simply the installation of a puppet government in Kyiv.

Had Putin been a better student of how Western democracies have responded to vital threats to their security, he would have understood why these assumptions were wrong. True, one lesson of the past century is that Western democracies have frequently ignored emerging security threats, as many of them did in the lead-up to the two world wars, the Korean War, and the September 11 attacks. As the U.S. diplomat and historian George Kennan once put it, democracies are like a prehistoric monster so indifferent to what is happening around him that “you practically have to whack off his tail to make him aware that his interests are being disturbed.” But an equally important lesson of the past century is that when their tails are whacked hard enough, Western democracies react with speed, determination, and strength. For the United States and its European allies, Russia’s invasion of Ukraine—which in size and scope constitutes the largest use of military force on the European continent since 1945 and poses a direct threat to NATO territory—has provided just such a case.

Yet even though the Western response has been surprisingly robust, it is far too soon for the West to declare victory. If democracies are capable of forming a swift and united front against exceptional threats, they have also long been prone to shifting priorities and turning attention inward once the immediate crisis has passed. For Western leaders, then, having quickly closed ranks to confront Putin’s aggression, the challenge now is how to sustain that unity. U.S. President Joe Biden stressed that point in Warsaw in March: “We must remain unified today and tomorrow and the day after and for the years and decades to come.” This is no easy task. To achieve that goal over the long term, the United States and its allies must overcome the political polarization, shifting economic burdens, and changes of leadership that have often fragmented the West in the past. Otherwise, the unity over Ukraine could turn out to be short-lived, leaving the West once again divided and autocrats strengthened.


It is not surprising that Putin would have assumed that the West would respond to a Russian invasion of Ukraine with harsh rhetoric but not much more. In 2008, when Putin sent Russian forces to dismember Georgia, French President Nicolas Sarkozy rushed to negotiate a cease-fire that kept Russian gains in place, while the United States and other European countries declined to back up their official dismay with even symbolic sanctions. The reaction six years later to Putin’s annexation of Crimea and his instigation of a separatist war in eastern Ukraine was only slightly tougher: although Russia was evicted from the G-8 and subjected to limited sanctions, German Chancellor Angela Merkel and U.S. President Barack Obama both ruled out sending lethal military aid to help Ukraine defend itself.

In similar fashion, . . .

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Written by Leisureguy

8 April 2022 at 3:50 pm

One idea for the slow rate of DOJ prosecutions for the January 6 insurrection and effort to overthrow the election

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T. Magnuson comment on a Jennifer Rubin column:

Some years ago I managed some budget lines for a DoD organization and, from that experience, the primary lesson learned was that nothing happens in government without budget. If something appears to be extraordinarily obtuse, such as the delay in harpooning 6 January whales, it behooves the curious to consult the budget and where the obtuseness occurred within the annual “budget cycle.” It would seem likely that AG Garland has been hamstrung by lack of budget and has been waiting for dollars to come available from the next fiscal year.
Having 800+ cases land all at once had to have been a financial shock to the DOJ. But the DOJ method is to prosecute from the ground up. They only assail the pinnacle when they’ve squeezed every bit of useful information from the pinnacle’s support.

Written by Leisureguy

3 April 2022 at 10:13 am

Take a look at what works in the American economy

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Heather Cox Richardson:

The March jobs report came out this morning and, once again, it was terrific. The economy added 431,000 jobs in March, and the figures for January and February were revised upward by 95,000. The U.S has added 1.7 million jobs between January and March, and unemployment is near an all-time low of 3.6%. As employment has risen, employers have had to raise wages to get workers. So, wages are up 5.6% for the year that ended in February.

Inflation in the U.S. is the highest it’s been in 40 years at 7.9%, but those high numbers echo other developed countries. In the 19 countries that use the euro, inflation rose by an annual rate of 7.5% in March, the highest level since officials began keeping records for the euro in 1997. Russia’s war on Ukraine, which is driving already high gasoline prices upward, and continuing supply chain problems are keeping inflation numbers high.

“America’s economic recovery from the historic shock of the pandemic has been nothing short of extraordinary,” CNN’s Anneken Tappe wrote today. The nation is “on track to recover from the pandemic recession a gobsmacking eight years sooner than it did following the Great Recession.”

These numbers matter not just because they show the U.S. coming out of the pandemic, but because they prove that Biden’s approach to the economy works. The key to this economic recovery was the American Rescue Plan, passed in March 2021 without a single Republican vote, that dedicated $1.9 trillion to helping the economy recover from the pandemic shutdowns. The vote on the American Rescue Plan indicated the dramatic difference in the way Democrats and Republicans believe the economy works.

After the Depression hit, in the 1930s, Democrats argued that the way to build the economy was for the government to make sure that workers and consumers had the resources to buy products and services. Raising wages, providing a basic social safety net, and improving education would enable the “demand side” of the economy to buy the goods that would employ Americans and increase productivity. Democrats regulated businesses, imposing rules on employers, and funded their programs with taxes that fell on Americans according to their ability to pay.

When this system pulled the country out of the Depression and funded the successful military mobilization of World War II, members of both parties embraced it. Once in office, Republican Dwight D. Eisenhower called for universal health insurance and backed the massive $26 billion Federal-Aid Highway Act of 1956 to build an initial 41,000 miles of roads across the United States, an act that provided jobs and infrastructure. To pay for these programs, he supported the high taxes of the war years, with the top marginal income bracket pegged at 91%.

“Our underlying philosophy,” said a Republican under Eisenhower, “is this: if a job has to be done to meet the needs of people, and no one else can do it, then it is a proper function of the federal government.” Americans had, “for the first time in our history, discovered and established the Authentic American Center in politics. This is not a Center in the European sense of an uneasy and precarious mid-point between large and powerful left-wing and right-wing elements of varying degrees of radicalism. It is a Center in the American sense of a common meeting-ground of the great majority of our people on our own issues, against a backdrop of our own history, our own current setting and our own responsibilities for the future.”

But Republicans since the 1980s have rejected that “Authentic American Center” and argued instead that the way to build the economy is by putting the weight of the government on the “supply side.” That is, the government should free up the capital of the wealthy by cutting taxes. Flush with cash, those at the top of society would invest in new industries that would, in turn, hire workers, and all Americans would rise together. Shortly after he took office, President Ronald Reagan launched government support for “supply side economics” with the first of many Republican tax cuts.

But rather than improving the living standards of all Americans, supply side economics never delivered the economic growth it promised. It turned out that tax cuts did not generally get reinvested into factories and innovation, but instead got turned into financial investments that concentrated wealth at the top of the economic ladder. Still, forty years later, Republicans have only hardened in their support for tax cuts. They insist that  . . .

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Written by Leisureguy

1 April 2022 at 10:12 pm

Where Putin is headed

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David Troy has a Facebook post with links. The post:

I don’t see any signs that Putin will back off from the Dugin playbook. I don’t see many signs that the West understands that. Nuclear war may only be avoidable if Putin’s orders are ignored.

Look, Dugin is nuts. That doesn’t mean his isn’t the playbook being used. In fact, I can find no material departure from his strategy as defined in “Foundations” in the events of the last 5 years.

Dugin throws around the terms “eschaton” and “katechon” a lot. Look them up.

I’m getting tired of warning people about this and being gaslit by casual observers who haven’t studied the work. Been saying this since 2017. Correct so far.

Only question is timing, and whether Putin’s orders will be obeyed. I do not say this lightly. We need to assume this is the strategy, because it absolutely has been so far — nuts or not. Ignore at our peril.

See supporting resources below.

The supporting resources are:

And another:

Another is the Medium article “The Swamp and The Fire: An Urgent Warning to the West

And this article by Jeff Schogol in Task & Purpose: “The Pentagon is now calling Russia an ‘acute threat’.”

And finally an article by John B. Dunlop in Stanford’s The Europe Center, “Aleksandr Dugin’s Foundations of Geopolitics.” That article begins:

One perceptive observer of the Russian political scene, Francoise Thom, noted as far back as 1994 that fascism, and especially its “Eurasianist” variant, was displacing Russian nationalism among statist Russian elites as a post-communist “Russian Idea,” especially in the foreign policy sphere. “The weakness of Russian nationalists,” she emphasized, “stems from their inability to clearly situate Russian frontiers. Euras[ianism] brings an ideological foundation for post-Soviet imperialism.” 1

There probably has not been another book published in Russia during the post-communist period that has exerted an influence on Russian military, police, and statist foreign policy elites comparable to that of Aleksandr Dugin’s 1997 neo-fascist treatise, Foundations of Geopolitics. 2 The impact of this intended “Eurasianist” textbook on key elements among Russian elites testifies to the worrisome rise of fascist ideas and sentiments during the late Yeltsin and Putin periods.

The author of this six-hundred-page program for the eventual rule of ethnic Russians over the lands extending “from Dublin to Vladisvostok,” Aleksandr Gel’evich Dugin, was born in 1962, the son, grandson, and great-grandson of Russian military officers. 3 His father is said to have held the rank of colonel, and, according to one source, he served in Soviet military intelligence, in the GRU. 4 By all accounts, Dugin was a bright and precocious youth with a talent for learning foreign languages. (He is said to have mastered at least nine of them.) While still a teenager, he joined a secretive group of Moscow intellectuals interested in mysticism, paganism, and fascism. Both the “masters” of this group and their “disciples” engaged, inter alia, in translating the works of foreign writers who shared their interests. As one of his contributions, Dugin completed a translation of a book by the Italian pagan- fascist philosopher Julius Evola.

Dugin is reported to have been detained by the KGB for participating in this study group, and forbidden literature was subsequently discovered at his apartment. According to one account, he then was expelled from the Moscow Aviation Institute, where he had enrolled as a student some time in the late 1970s. According to another account, he eventually managed to graduate from the institute. 5

In 1987, during Gorbachev’s second year of rule, Dugin was in his mid-twenties and emerged as a leader of the notorious anti-Semitic Russian nationalist organization, Pamyat’, headed by photographer Dmitrii Vasil’ev. During late 1988 and 1989, Dugin served as a member of the Pamyat’ Central Council.

In 1989, taking advantage of increased opportunities to visit the West, Dugin spent most of the year traveling to Western European countries. While there, he strengthened ties with leading figures of the European New Right, such as Frenchman Alain de Benoist and Belgian Jean-Francois Thiriart. These contacts led to Dugin’s “belated reconciliation” with the USSR, just as that state was approaching its final demise. It appears that, largely as a result of these contacts with the European Nouvelle Droite, Dugin became a fascist theorist. On the subject of Dugin’s indubitable fascist orientation, Stephen

Shenfield has written: “Crucial to Dugin’s politics is the classical concept of the ‘conservative revolution’ that overturns the post-Enlightenment world and installs a new order in which the heroic values of the almost forgotten ‘Tradition’ are renewed. It is this concept that identifies Dugin unequivocally as a fascist.” 6

By the beginning of the 1990s, as the Soviet Union was approaching its collapse, Dugin began to assume a more high-profile political role. He formed an association with “statist patriots” in 

Continue reading.

This is scary stuff, and US effectiveness in meeting the threat is weakened because the US is a house divided against itself — for example, Former President Trump has asked Putin to dig up dirt — that is, make accusations against — President Biden. In other words, Trump is willing to cooperate with Putin to weaken President Biden (and thus the US). And Trump has the support of the Republican party. We’ve not seen anything like that before. 

Written by Leisureguy

31 March 2022 at 6:19 pm

The Red Wedding for Rural Pharmacies

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Matt Stoller writes in BIG:

Biden just tried to regulate CVS, United Health, and Cigna. Cigna struck back, and is now trying to wipe out independent pharmacies and harm patients. Plus, antitrust enforcers are getting real.

First some good news. Last week, I reported on how a bad judge dismissed an important antitrust suit against Amazon. Well the state Attorney General involved, Karl Racine, just said he will be filing a motion for reconsideration, which is basically an appeal. Yay!

Ok, onward. Today I’m writing about what happens when a monopolist gets mad. In this case, it’s health giant Cigna taking revenge on rural pharmacies and patients after the Biden administration tried to slightly reduce the firm’s profits from Medicare prescription drug benefits.

I’ll also show how antitrust enforcers have stopped being polite and are starting to get real. The FTC’s Lina Khan is going after TurboTax maker Intuit for false and deceptive practices, and the Antitrust Division’s Jonathan Kanter blocked a big but obscure merger of port crane producers.

And now…

series Game of Thrones was The Rains of Castamere, otherwise known as the ‘Red Wedding.’ The Red Wedding is perhaps the ugliest and most disproportionate sense of revenge ever aired on TV. In it, a regional warlord named Robb Stark attends a wedding of one of his vassals that is supposed to help patch up a minor dispute with a fellow warlord, Walder Frey. The wedding is at Frey’s castle, and Frey invites Stark, his family, and his soldiers to feast. For a time, everyone makes merry, but towards the end of the evening, Frey has his troops ambush Stark and his now-drunk band. Frey has everyone massacred, and even has one of his soldiers stab Stark’s pregnant wife in the belly to ensure he kills the unborn child.

The message from Frey to all future rivals was crystal clear. Don’t mess with me. Though fictional, Game of Thrones draws from medieval history, and such tales of vengeance are not unusual. English history, French history, and many empires of conquest pursued such a strategy of brutalizing subjects so viciously they wouldn’t consider fighting back in the future. These strategies are common because they work. For instance, Mongol empire had many cities surrender without a fight, due to fear that the Mongols would massacre everyone inside should they put up an inch of resistance.

The point of these stories isn’t just about geopolitics, but what happens when humans have too much power over other humans. Which brings me to the problem of monopolies, and what some of them do when they are even slightly challenged. A few months ago, the Biden administration put out a rule to regulate the pharmacy benefits management business, an opaque but massive part in the pharmaceutical drug supply chain. PBMs handle the drug benefit piece of insurance plans. They maintain a list of drugs for insurance companies, they negotiate drug prices, and they manage reimbursements to pharmacies.

The original idea behind PBMs is they would be able to get enough bargaining power by representing multiple insurance companies that they could negotiate to bring down drug prices. And accumulate bargaining power they did, merging until three PBMs control 80% of the insurance market. They are also vertically integrated with insurance companies and drug store chains. The top three PBMs are owned by CVS, United Health, and Cigna.

Unfortunately, because of an exemption from anti-kickback laws, PBMs don’t use their bargaining power to reduce consumer prices. Instead, they force pharmaceutical firms to compete over who will give the PBM the biggest kickback, which in the industry is known as a rebate. Take insulin. In 2013, Sanofi gave a 2-4% kickback to PBMs to prefer their product to customers. In 2018, that number went up to 56%. In other words, more than half of the price of insulin is going to a middleman who does nothing more than push around paper.

The many bad practices of PBMs are legendary. PBMs often force customers to buy more expensive drugs over their generic counterparts, likely because they get kickbacks when customers do so. This ends up making this obscure group of firms a lot money. The combined revenue of the top three firms, who comprise just a small part of the U.S. health system, is larger than the entire amount France spends on all medical care for its entire population.

It gets worse. PBMs all own mail-order pharmacies, and they are increasingly mandating that patients use those mail-order pharmacies instead of the local pharmacy around the corner. Moreover, PBMs now have so much power they are able to claw back money randomly from pharmacies months after a drug was dispensed, using something called a Direct and Indirect Remuneration fee. (DIR fees are only used for Medicare plans, but that is still 37% of the market.) For independent pharmacies, DIR fees are impossible to plan for, they are opaque, and they end up raising prices for consumers.

PBMs are particularly bad for independent pharmacies, who are a critical lifeline in many underserved parts of America. 77% of independent pharmacies serve communities with fewer than 50,000 people. In these places, the independent pharmacist often is the health care infrastructure. Seven in ten do free home delivery, a service which is virtually non-existent with chains. The amount that PBMs have been reimbursing these pharmacists has been going down for years, to the point that many are losing money depending on the medicine they are filling for customers. To put it differently, it’s the equivalent of Amazon raising fees on third party sellers, or Tyson cutting the amount they pay to cattle ranchers.

A few months ago, the Biden administration proposed eliminating most DIR fees, which would get rid of a good, but not critical, profit center for giant PBMs. It looked like a nice win for the anti-monopolists, patients, and independent pharmacies. Last week, however, a contact passed me a new contract from Express Scripts, the giant PBM owned by Cigna.

Cigna has about a quarter of the PBM market, which means that one out of every four people who goes to a pharmacy to get drugs is using Cigna insurance. There’s regional variation, so in some places Cigna won’t have much market share, while in states like Georgia, something like 50% of the Medicare drug plans are Cigna plans. As one pharmacist put it to me, “If you don’t sign these contracts, then a third of patients won’t come to me because they won’t be able to get their services through their insurance benefits.” In other words, pharmacists can’t turn away a third of the people who come into the store, so they tend accept whatever terms Cigna offers.

And as it turns out, Cigna’s offer to pharmacists just got a lot worse. PBM pricing is insanely weird and complex, so I’ll try to explain it to you. The short story is . . .

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Written by Leisureguy

29 March 2022 at 1:52 pm

Judges Behaving Badly: Amazon Antitrust Suit Dismissed

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Matt Stoller writes in BIG:

hree items this week:

  • An incompetent judge let Amazon off the hook for monopolization.
  • Why hasn’t the FTC challenged the Amazon-MGM merger?
  • Is Congress about to fix our shipping mess? Sort of!

In the meantime, last weekend I did a Breaking Points video on war, consolidation and the coming food crisis. If you want to watch it, you can see it here.

“That’s how the market works”

Last May, I wrote a long piece explaining the scam at the heart of Amazon Prime. When you think about it, Prime doesn’t really make any economic sense. Prime members pay a small annual or monthly fee, and in return get massively valuable and expensive benefits like free shipping, free movies and TV, video games, and so forth. Amazon likely gets between $10-20 billion a year in Prime fees, but delivering these services costs Amazon probably upwards of $80-100 billion a year. That means Amazon has to find $70 billion of cash somewhere as an endless subsidy. Yet, Amazon is profitable, and prices for goods on Amazon are almost always the lowest you can find online. How does Amazon pull this off?

There are three steps. First, Amazon acquired enough customers for its retail division to monopolize online buying and selling. It did this by offering free shipping and other benefits at a vastly subsidized rate to Prime members. For consumers, this seemed like a great deal. They got a very good reliable place to buy stuff online. But on the other side of the market, for sellers, many of whom sold 80-100% of their wares on Amazon’s Marketplace, Amazon acquired substantial market power. “[We] have nowhere else to go and Amazon knows it,” said one seller that sells products on Amazon.

Second, Amazon forced these captive sellers to pay massive fees to sell on its marketplace, by making them use its fulfillment and warehousing (as well as other services). Amazon took those fees, which brought in $121 billion in 2021, to pay for its various Prime benefits, including shipping. And third, and this is where it becomes brilliant, Amazon then forced those sellers to keep their prices high through non-Amazon sales channels. If they ever sold elsewhere for less, they would be de facto kicked off Amazon.

These three steps were each pivotal. Without the subsidy of Prime, it wouldn’t have been possible for Amazon to capture control over most online buying. Without the seller fees, Amazon couldn’t afford that subsidy. And without forcing sellers to raise their prices elsewhere to ensure Amazon had the lowest prices online, you’d see signs like ‘Buy cheaper at’ or ‘ costs less than Amazon’ everywhere, and Amazon would be undercut in the marketplace. But you don’t see such signs. Consumers think they are getting the best deal at Amazon, and they usually are.

It’s a genius scheme, because it gives the appearance that Amazon offers the lowest price and free shipping, when in fact consumers pay a higher cost for products without realizing it. I first wrote about Prime because of an antitrust suit filed by D.C. Attorney General Karl Racine, who filed a case in district court spelling out this scheme in a rigorous and detailed way. There are a bunch of investigations going on into Amazon, and this was the first case filed that came out of them. Filing this case was a sort of loner approach by Racine, who is an aggressive and fearless litigator. It was an excellent complaint – detailed, factually rigorous, and legally sound – and a class action case with a very similar theory just passed the critical motion to dismiss stage in a Seattle courtroom with a Bush-appointee judge.

I thought it was going to be a titanic clash, and it brought critical legal questions into the courts to be hashed out by a jury. Unfortunately, the judge Racine got assigned to this case, Hiram Puig-Lugo, did not agree. Earlier this week, at what looked like a routine scheduling hearing, Puig-Lugo, whose expertise is in family law, shocked everyone involved by dismissing Racine’s Amazon complaint outright. That means the case is over, unless Racine appeals. And how Puig-Lugo dismissed the case was as odd as his choice to do so. For important complaints like this, judges almost always put down in writing their rationale for making decisions at key stages. But Puig-Lugo did not. He simply read from the bench that he didn’t think the claimed conduct violated the law.

The deeper you go, the more odd the decision. According to Law360, Puig-Lugo said in his ruling that maybe it was just a coincidence that merchants were raising prices on other channels. They could be engaged in “lawful, unchoreographed free-market behavior.” Such a statement makes no sense, because there were explicit contracts between Amazon and sellers mandating higher prices. And yet, the judge simply said when making his ruling from the bench, “That’s how the market works.”

There are bad decisions in antitrust law, ones that make the law harder to enforce going forward. Usually bad decisions are on the outer edge of precedent, and have legal reasoning that is illogic but coherent. This, however, wasn’t just a bad decision. It was the decision of someone who didn’t care to learn the facts of the case before him, or even how antitrust law itself works. Frankly I’m not sure Puig-Lugo even read the complaints, though it’s also possible he’s just dumb. There are dumb judges. Or maybe he wanted the case to go away; his interest is in family law and trafficking, not complex business litigation. In any case, Puig-Lugo dismissed a well-prepared complaint on a very important part of the economy, without even explaining himself in writing.

Obviously, Racine should appeal. I would normally say . . .

Continue reading. There’s much more. And IMO this is a newsletter worth the subscription price (a llittle less than $1 per week, paid annually).

Written by Leisureguy

24 March 2022 at 11:53 am

How Biden has handled Russia’s war against Ukraine

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Click the link to read the full conversation.

Written by Leisureguy

18 March 2022 at 7:20 pm

More than two dozen Senate Republicans demand Biden do more for Ukraine after voting against $13.6 billion for Ukraine

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The Republican party has become a trash political party. Mariana Alfaro and Eugene Scott report in the Washington Post:

More than two dozen Senate Republicans are demanding that President Biden do more to aid war-torn Ukraine and arm its forces against Russia’s brutal assault, after voting last week against $13.6 billion in military and humanitarian assistance for Ukraine.

Consider Sen. Rick Scott (R-Fla.), who heard Ukrainian President Volodymyr Zelensky’s emotional plea in a virtual address to Congress on Wednesday for more weapons and a no-fly zone over Ukraine.

“President Biden needs to make a decision TODAY: either give Ukraine access to the planes and antiaircraft defense systems it needs to defend itself, or enforce a no-fly zone to close Ukrainian skies to Russian attacks,” Scott said in a statement. “If President Biden does not do this NOW, President Biden will show himself to be absolutely heartless and ignorant of the deaths of innocent Ukrainian children and families.”

Last week, Scott was one of 31 Republicans to vote against a sweeping, $1.5 trillion spending bill to fund government agencies and departments through the remainder of the fiscal year and that would also include $13.6 billion in assistance for Ukraine. Biden signed the bill into law Tuesday, casting the aid as the United States “moving urgently to further augment the support to the brave people of Ukraine as they defend their country.”

After casting a “no” vote, Scott assailed the overall spending bill as wasteful, arguing that it was filled with lawmakers’ pet projects. “It makes my blood boil,” Scott said last week.

Democrats quickly condemned what they saw as glaring hypocrisy among the Republicans who voted against the aid but were quick to criticize Biden as a commander in chief leading from behind in addressing Ukraine’s needs.

“’We should send more lethal aid to Ukraine which I voted against last week’ is making my brain melt,” tweeted Sen. Brian Schatz (D-Hawaii).

The Russian invasion of Ukraine has highlighted divisions in the Republican Party on U.S. involvement overseas and the standing of the NATO alliance. For decades, during the presidencies of Ronald Reagan, George H.W. Bush and George W. Bush, the GOP embraced a hawkish view with robust military spending and certainty about coming to the aid of allies.

President Donald Trump’s “America First” outlook and efforts to undermine NATO, including questioning why the military alliance even existed, secured a foothold in the GOP, reflected in the response of Rep. Marjorie Taylor Greene (R-Ga.) to Ukraine. In a video Wednesday, Greene blamed both Russia and Ukraine, and warned against U.S. intervention. Biden has said repeatedly that he would not send U.S. troops to fight.

Potential 2024 presidential candidates such as Scott have been highly critical of Biden, who also announced Wednesday that the Pentagon was sending nearly $1 billion in military equipment to Ukraine, including 800 Stinger antiaircraft systems, 100 drones, 25,000 helmets and more than 20 million rounds of small-arms ammunition and grenade launcher and mortar rounds.

In early February, Sen. Josh Hawley (R-Mo.), another possible White House candidate, sent a letter to Secretary of State Antony Blinken suggesting that the United States would be worse off if Ukraine were admitted to NATO, the military alliance of 30 mainly Western countries — including the United States — bound by a mutual defense treaty, and argued that the United States should instead focus on countering China.

Hawley, who voted against the spending bill with billions for Ukraine, said Wednesday that Biden needs to “step up” and send MiG jet fighters and other weapons to Ukraine, accusing the administration of “dragging its feet.”

The Pentagon has rebuffed Poland’s offer to send MiG fighter jets to Ukraine amid fears of further escalation involving a NATO country.

In a statement Thursday, Hawley said, “Aid for Ukraine should not be held hostage to the Democrats’ pet projects and I did not support the massive $1.5 trillion omnibus spending bill stuffed with billions in earmarks.”

Sen. Ben Sasse (R-Neb.), a member of the Senate Intelligence Committee who also voted against the spending bill, told MSNBC on Thursday that the United States “can do more” for Ukraine. . .

Continue reading. But it’s depressing. And the voters will not hold these Senators to account for the mismatch between their words and votes.

Written by Leisureguy

17 March 2022 at 4:34 pm

“We Are Witnessing a New Form of Warfare”

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In the Washington Monthly Paul Glastris interviews a source who has some interesting observations:

On March 9, I had a conversation about the war in Ukraine with a longtime source of mine who has had a decades-long career in the military and in the intelligence community, serving both in and out of government. The source requested anonymity to speak freely. The following Q&A has been edited for brevity.

Q: What do you make of the offer by Poland to provide MiG fighters to the United States that we would then deliver to Ukraine?

A: It was really not smart of the Poles to float this publicly. It was an unforced error on their part. The more visible this discussion is, the less helpful it is.

Q: So how will Ukraine get the fighters it needs?

A: There are countries that have MiGs that are not members of NATO. This is a classic case where the U.S. government gets its checkbook out and quietly goes to one of those countries. The fighters just show up in Ukraine. The Russians wouldn’t even necessarily know where they came from—remember, right now, they don’t even control the airspace over Ukraine. They would obviously know what happened, but the United States and NATO would have deniability. It’s called “foreign material acquisition.” We did this all the time during the Cold War.

Q: How vital is it to get those MIGs to Ukraine?

A: I don’t see it as being decisive. Maybe I’m wrong. The Ukrainians seem to want them badly. I’m sure they want to use them to hit Russian tanks and deny Russia control of the airspace. But they are doing an amazing job of that with the weapons we already gave them. We’ve supplied them with something like 17,000 anti-tank missiles and I don’t know how many [antiaircraft] Stingers. We should be giving them thousands more.

We are witnessing a new form of warfare. To put a tank on a battlefield costs maybe $30 million. A Javelin anti-tank missile costs $175,000. Similarly with fighter jets and antiaircraft missiles. You can defend territory at a tiny fraction of what it costs the aggressor to take it. The drones the Ukrainians bought from the Turks are doing incredible damage. But just the cheap commercial drones you buy at Walmart can give you total tactical awareness of the battlefield. So Ukrainians can see everything the Russians are doing. They don’t even need satellites. But you can buy satellite imagery on the commercial market, too, and that gives you strategic awareness.

Q: How worried are you that the Russians will be able to cut off the supply of weapons and other key material from the West to the Ukrainians?

A: The Russians are said to be able to interdict supplies. But if you have Ukrainian convoys equipped with Stingers and also teams equipped with Stingers on fixed sites along the routes, all they need to do is shoot down a few Russian aircraft and the Russians are going to be saying, “Forget it, I don’t want to go there.” Will it be harder to get supplies into Kyiv if the Russians manage to blockade the city? Yes. But the Ukrainians can then attack the Russians from behind.

Q: How much of the military resistance we are seeing in Ukraine is the result of citizens rising up themselves and how much of it is being directed by the Ukrainian military?

A: Yeah, you see the photos in the media of the handmade Molotov cocktails. No question: The will of the Ukrainian people is incredible. You saw a taste of that determination in 2014. I saw it when I was in Ukraine right after the 2014 revolution. If Putin had been paying attention, they would’ve seen that, too. But also, we’ve had Green Berets going into Ukraine for years training Ukrainian special forces for just this kind of moment. This resistance was very well planned out.

Q: How does this end?  . . .

Continue reading.

Written by Leisureguy

12 March 2022 at 4:46 pm

Monopolies Take a Fifth of Your Wages

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These workers are very happy with weak antitrust enforcement because they are fictional.

Matt Stoller’s most recent post in BIG (the source of the image above) is worth reading. It begins:

In 2018, a new Federal Trade Commissioner named Rohit Chopra began stirring up trouble at the agency. There are five commissioners at the FTC, and they traditionally had agreed on how to enforce the laws in favor of fair competition. Dissents were rare, and upsetting, because most staffers and commissioners saw themselves as scientists or experts serving the public under a bipartisan consensus.

Chopra, however, dissented. A lot. He did so because in his view, the FTC had failed in its mandate is to police fair dealing in the American marketplace, including laws against monopolies. Instead of real work, it offered slaps-on-the-wrist to powerful entities, and it failed to stand up for workers, business people, and communities whose rights were being abused. In his first week, Chopra sent an internal memo with the memorable phrase, “FTC orders are not suggestions,” both offending a lot of the old-timers, and making it clear that the parking ticket style penalties the government had been dishing out to lawbreakers would no longer suffice. His dissents had a meaningful impact, and embarrassed commissioners into taking more aggressive action. For instance, despite Chopra being a Democrat, he very likely forced the FTC under Trump to bring an antitrust suit against Facebook.

Chopra’s most important dissent was in a 2018 case called Your Therapy Source, a case in which the FTC caught several employers colluding together to suppress wages, and doing so overtly on text messages. This is straight-up price-fixing and the evidence was ironclad. I did a Twitter thread at the time on the scheme, and why it mattered.


In this case, it’s not that the FTC didn’t act, it’s just that the commission didn’t impose any penalties on the organizer of the scheme. In his dissent, Chopra argued that the FTC should not have let the perpetrator off with a warning, and he made a public criminal referral to the Department of Justice Antitrust Division, which, unlike the FTC, can actually use handcuffs. The DOJ indicted in late 2020, and the courts upheld the indictment late last year in United States vs. Jindal.

That case is the first antitrust criminal case against wage-fixing that made it past the motion-to-dismiss stage, meaning that the Antitrust Division has brought wage-fixing as a crime under the orbit of the antitrust laws for the first time in history. Until Jindal, it hadn’t been accepted by the antitrust bar and the libertarian establishment that monopolizing the purchase of labor is an acceptable purpose of the antitrust laws. Despite increasing rhetoric around labor and mergers, for instance, the Trump administration chose to allow the merger to monopoly of two gold mines in Nevada. As workers no longer could threaten to leave one mine and work for the other, this merger led immediately to lower wages and the decertification of the union representing workers at the mines. Clearly, market power matters not just consumers, but over workers as well. (And this has been obvious for a long time; I first wrote about this dynamic in 2017 in Vice, in a piece on how monopoly power costs workers $14k a year.)

You would think this dynamic would be recognized by everyone at this point, but in fact, it’s still not entirely accepted by Chicago School stalwarts. The New York Times quoted antitrust defense lawyers whining about the new framework.

note by the law firm White & Case, for instance, complained that the move to block Penguin Random House’s attempt to buy Simon & Schuster on the grounds that it would reduce royalties to authors is “emblematic of the Biden administration’s and the new populist antitrust movement’s push to direct the purpose of antitrust away from consumer welfare price effects and towards other social harms.”

And just two weeks ago, Christine Wilson and Noah Phillips, who are the pro-monopoly commissioners at the Federal Trade Commission, held fast to their consumer welfare ideology which excludes the effects of market power on labor. They refused to allow the FTC to look at whether a merger of two Rhode Island hospitals will reduce competition for the services of nurses and doctors.

Wilson and Phillips, though, are pretty much dead-enders, holding on to an ideology that makes increasingly little sense in either party or within the antitrust world. The courts are moving away from a pure consumer welfare analysis. Now, the Antitrust Division is going after wage-fixing in several more cases, and corporate lawyers are telling every firm in America to stop the practice of holding down wages with illegal schemes.

So as it turns out, Chopra was on to a lot more than just one scheme. Chopra is no longer at the FTC, but the work he did, and that Antitrust Division lawyers picked up on, is reverberating. Earlier this week, the Biden administration’s Treasury Department put out an astonishing report on . . .

Continue reading.

Written by Leisureguy

11 March 2022 at 1:20 pm

Biden Answered the 3 a.m. Call

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Franklin Foer writes in the Atlantic:

When Hillary Clinton sought to sow doubts about Barack Obama, her rival for the 2008 Democratic presidential nomination, she ran an attack ad tarnishing him as dangerously inexperienced. As the screen shows images from a suburban house, a husky-voiced narrator intones: “It’s 3 a.m. and your children are safe and asleep, but there’s a phone in the White House and it’s ringing.” There’s clearly been a terrible international incident. The narrator asks, “Who do you want answering the phone?”

As the Russian invasion of Ukraine has unfolded, the narrator’s question has rattled around my head. The invasion is a moral test, because Putin has committed atrocities that demand the strongest possible response. And it is a strategic test, because the strongest possible response could very plausibly escalate into a nuclear conflict.

Joe Biden hasn’t received the full credit he deserves for his statecraft during this crisis, because he has pursued a policy of self-effacement. Rather than touting his accomplishments in mobilizing a unified global response to the invasion, he has portrayed the stringent sanctions as the triumph of an alliance. By carefully limiting his own public role—and letting France’s Emmanuel Macron and Germany’s Olaf Scholz take turns as the lead faces of NATO—he has left Vladimir Putin with little opportunity to portray the conflict as a standoff with the United States, a narrative that the Russian leader would clearly prefer. He’s shown how to wield American leadership in the face of deep European ambivalence about its exercise.

His handling of the domestic politics of the crisis has been just as savvy. Although he could justifiably have portrayed Republicans as the party of Putin apologists, he refrained from dinging his political enemies. During his State of the Union address, he actively encouraged Republicans to feel as if they were his partners in a popular front.

This is surely redolent of the bipartisan foreign policy that Biden nostalgically yearns to revive.  But it’s also an important tactic. By depoliticizing the issue, he has made it likely that Congress will quickly fund aid and arms for the Ukrainian military. And as gas prices spike, it will be rhetorically harder for Republicans to effectively pin the blame on him, because they have been fully supportive of sanctions.

Even as Biden has built a bipartisan consensus, he’s resisted pressure to pursue a more hawkish course. As a Democrat who lived through the 9/11 era, he remembers well how he and other leaders of his party adopted chest-thumping policies to defuse accusations of weakness. For decades, Democratic aspirants attempted to demonstrate their own steel in order to avoid evoking the politically fatal image of Michael Dukakis in a tank.

The same dynamic could have easily transpired with Ukraine. But Biden’s faith in his own foreign-policy chops leaves him unconcerned about proving his bona fides. He knows the dangers of bluster and has steadfastly avoided them. When Putin announced that he was putting his nuclear arsenal into “special combat readiness,” Biden quickly made clear that he wouldn’t reciprocate. He has brushed off calls to impose a no-fly zone over Ukraine. From the start of his administration, he has tried to telegraph his thinking to Putin, so that the Russian leader could never misunderstand his intentions, and would never mistakenly assume that an American strike against Russia was imminent.

After Afghanistan revealed a failure to imagine the worst-case scenario, Biden’s response to Russia’s war has been marked by its creativity. In advance of the invasion, the administration surreptitiously hastened its shipments of arms to Ukraine, bestowing on it an armament well suited to the eventuality of urban combat. By preparing a suite of unconventional sanctions long before Putin’s troops crossed the border, the administration avoided the need to cobble together policy and the scramble to inform allies of its plans. The legwork was already done. Most impressively, it broadcast its intelligence about Russia to the world in anticipation of an invasion. (Having a veteran diplomat as CIA chief helps.) Because its assessment of Russian intentions proved to be painfully accurate, the maneuver has helped reclaim the lost trust of allies and the global public.

It’s a quietly bravura performance—and it’s hard to imagine that . . .

Continue reading.

Written by Leisureguy

9 March 2022 at 8:09 pm

Putin was wrong about everything. But so were U.S. right-wingers.

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Jennifer Rubin (rational Republican) has a good column in the Washington Post. (Gift link, no paywall.) It begins:

Russian President Vladimir Putin, according to U.S. intelligence officials, is surprised and frustrated, and is becoming increasingly dangerous as his war against democratic Ukraine threatens to decimate Putin’s own country.

At a House Intelligence Committee hearing on Tuesday, CIA director William J. Burns testified that Putin “was confident that he had modernized his military and they were capable of quick, decisive victory at minimal cost. He’s been proven wrong on every count. Those assumptions have proven to be profoundly flawed over the last 12 days of conflict.” Contrary to pundits’ prognostication that Russia will eventually “win,” Burns explained that Putin will not achieve victory according to the goals the Russian leader set out — namely occupying major cities, thoroughly subduing Ukrainians and removing their president. “I fail to see how he can produce that kind of an endgame.”

It’s fair to ask how Putin came to launch a war that now threatens to wreck his regime. Dictators surround themselves with yes-men who, out of self-preservation, do not tell him things that contradict his worldview. The West won’t act. Ukraine isn’t a real country. Having chosen military leaders for their loyalty instead of competence, with this invasion, Putin has revealed his military to be far less menacing than other powers suspected. Now, the whole world knows: His forces lack morale, training, logistical competence and capable leadership.

Putin thought many Ukrainians would welcome the Russians as “liberators.” Wrong. He no doubt expected the West to put on only superficial sanctions. Wrong again. And, perhaps most devastating for the future of his regime and the Russian economy, the one economic lifeline — energy — is now threatened. Putin imagined the United States and Europe would be unwilling to sacrifice their supply of Russian oil. Wrong once more.

The United States and, by year’s end, Britain will stop importing. Europe vows to shrink its oil imports by two-thirds. Finding buyers to make up those sales will not be easy. As the New York Times reports, “The Russian oil industry … is likely to experience a wrenching reworking about how it does business in the coming weeks, months and even years. In the short term, this painful reckoning will come not so much because blue-chip oil companies are leaving, but because Russian oil and gas have suddenly become toxic to many buyers.”

The common thread running through all of Putin’s miscalculations was . . .

Continue reading. (Gift link) The comments also are interesting.

As I read this column, I had the image of a single strong stick (Putin) being weaker than a united bundle of smaller sticks (citizens in a free democracy, capable of individually choosing to cooperate to achieve a common goal).

Written by Leisureguy

9 March 2022 at 7:07 pm

US oil pipeline situation

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Heather Cox Richardson’s column includes information about US oil pipelines that I didn’t know. She writes:

This morning, President Joe Biden announced an executive order that will ban the import of Russian oil, liquified natural gas, and coal to the United States, as part of a plan to cut Russia off from the world economy.

Biden did this under pressure from Congress, which was preparing its own bill for this outcome. The administration hesitated to take this step independently from other allies and partners. In 2021, the U.S. imported only 3% of its oil from Russia, and that number has been dropping in 2022, while Europe is not in a position to cut off Russian oil, although the European Union did offer a plan to cut Russian gas imports by two thirds this year, and Britain declared it would stop importing Russian oil in 2023.

According to a new Reuters poll, 63% of Americans approve of cutting off Russian oil despite expected price hikes. Still, rising gasoline prices are a big problem, and the optics of cutting off any oil supplies right now will hurt the administration.

The government has little to do with the cost of gasoline. Since our oil companies are privately owned, the cost of oil goes up and down according to supply and demand. That, in turn, can depend on disruptions to crude oil supplies, refinery operations, or pipeline problems, or even on what people think will be future demands. Last year, in the midst of the pandemic, the economic recession meant there was little demand for oil, and prices were very low. That meant producers reduced production, and they have not yet fully ramped it up again.

Even before Russia invaded Ukraine, the booming U.S. economy meant increased demand for oil and thus increased prices. U.S. companies increased their production, but perhaps not enough to address the imbalance between supply and demand that would address soaring gasoline prices. And in that gap, oil companies made huge profits.

On February 20, 2022, Tom Wilson of Financial Times reported that the seven top oil companies, including BP, Shell, ExxonMobil, and Chevron, would return a near-record $38 to $41 billion to shareholders through stock buybacks, after distributing $50 billion in dividends. The Wall Street Journal in January noted, “While that is good for investors in the company, there are mounting concerns that there isn’t enough investment in new fossil-fuel supply to meet growing demand.”

Low supplies are driving prices up, but Republicans are trying to turn those high gas prices into a culture war, blaming Biden’s cancellation of the Keystone XL pipeline for the nation’s high gas prices. Representative Jake LaTurner (R-KS), for example, has launched a paid ad on Facebook and Twitter saying that the Keystone XL pipeline “would have produced 830,000 barrels of oil per day, more than enough to offset what we import from Russia.” Others blame Biden’s cancellation of new oil permits in the Arctic National Wildlife Refuge for high prices.

In fact, both of these points are misleading.

The Keystone Pipeline, which runs from oil sand fields in Alberta, Canada, into the United States and to Cushing, Oklahoma, exists and is fully operational. The XL Pipeline consists of two new additions to the original pipeline, together adding up to 1700 new miles. One addition was designed to connect Cushing to oil refineries in Texas, on the Gulf Coast. That section was built and went into operation in January 2017.

The second extension is the one that caused such a fuss. It was to carry crude oil from Alberta to Kansas, traveling through Montana and North Dakota, where it would pick up U.S. crude oil to deliver it to the Gulf Coast of Texas. (This would have had the effect of raising oil prices in the middle of the country.) This leg crossed an international border, and thus the Canadian company building it needed approval from the State Department. The proposed pipeline would threaten water supplies in the Northwest if it leaked, for it would run over a huge aquifer, and the people who lived downstream from the proposed route, including Lakotas and members of other Indigenous tribes, protested the pipeline’s construction.

The Trump administration approved this construction, and the opposition of environmentalists, Indigenous Americans, and Democrats to the pipeline enabled Republicans to turn it into a cultural symbol, suggesting that the opposition of these groups was hobbling the economy. In fact, the company behind the project was Canadian and wanted the extension to shorten transportation routes for its oil. The winners on the American side were the refinery owners; the jobs the project would create were primarily in the construction of the project.

As soon as he took office, Biden halted the construction. But Blaming today’s high prices on the cancellation of this spur of the Keystone Pipeline is a resort to that culture war. Even if Biden had not overturned Trump’s approval of the project, it would not be completed yet, and even if it were completed, there is no guarantee that it would have delivered more oil to the U.S., rather than to the ports for export elsewhere. The U.S. exports about half of its oil production to other countries, both because the crude we produce is hard for us to refine and because of the demand for it overseas. The Keystone pipeline was designed for export.

The argument that Biden’s cancellation of new oil drilling leases on public property has driven prices up is similarly misleading. On November 17, 2020, after he lost the election, former president Trump abruptly allowed oil and gas companies to pick out land for drilling rights on about 1.6 million acres of Alaska’s Arctic National Wildlife Refuge. Biden froze those permits as soon as he took office. Only about 10% of drilling takes place on public land, and there are currently about 9000 permits already issued that have not been developed.

But oil drilling on public land returns huge sums of money to the states in whose boundaries the drilling occurs; at the hearing for the confirmation of Interior Secretary Deb Haaland, Senator John Barrasso (R-WY), the top Republican on the Senate Energy and Natural Resources Committee, said that his state collects more than a billion dollars a year in royalties and taxes from the oil, gas, and coal produced on federal lands in the state, and warned that the Biden administration’s opposition to oil permits is “taking a sledgehammer to Western states’ economies.”

Oil prices are skyrocketing because of  . . .

Continue reading.

Written by Leisureguy

9 March 2022 at 3:17 am

American Petroleum Institute says that President Biden is responsible for Russia’s attack on Ukraine

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A sense of shame seems completely absent from some. Judd Legum writes in Popular Information:

The American Petroleum Institute (API), the lobbying arm of the oil and gas industry, has intensified its efforts to exploit Russia’s invasion of Ukraine to push the United States government to roll back environmental protections, open up more federal land for drilling, and greenlight the construction of pipelines.

In a March 4 press release, API suggested Biden was responsible for Russia’s decision to invade Ukraine because he failed to cater to the fossil fuel industry. According to API, the fact that the Biden administration considered taxes on the industry and talked about using more clean energy in the future encouraged Putin to attack.

The time for helping Ukraine with American energy was months ago. Then, Biden administration support for robust U.S. production might have helped deter Moscow from thinking that European nations dependent on Russian energy might do less to oppose Russia the aggressor.

Instead, the administration discouraged American energy. For more than a year it has halted new federal leasing – key to future energy investment and production. It canceled energy infrastructure, blocked development in parts of Alaska, entertained new taxes to punish the U.S. energy industry and chilled future investment by signaling that oil and gas wouldn’t be part of America’s future energy mix.

Some of API’s claims are simply false. Biden “has outpaced Donald Trump in issuing drilling permits on public lands.” There are currently are “9,000 approved oil leases that the oil companies are not tapping.” Other claims are misdirection. Biden did nix the Keystone XL pipeline, but the pipeline would not have had any impact on Europe’s dependence on Russian energy. More fundamentally, the current level of fossil fuel production in the United States does not reflect the industry’s capacity but, rather, its desire to keep supplies constrained and prices high.

API presents itself and the fossil fuel corporations it represents as the solution to Russian aggression. But American oil and gas companies have spent years partnering with Russia, bolstering Putin’s regime with a critical source of cash and influence. API, meanwhile, has consistently, and often successfully, sought to block or weakened sanctions proposed in response to Russian aggression.

United States fossil fuel companies aren’t producing more because shareholders prefer windfall profits

Scott Sheffield, CEO of Pioneer Natural Resources, the largest shale oil operator in the United States, said that the industry would not increase production this year. This is due to “demands from Wall Street that operators use their oil price windfall to pay dividends.” In other words, shareholders prefer to keep the supply constrained and prices high.

Current domestic production of oil remains well below existing capacity. Prior to the pandemic, the United States was producing about 13 million barrels per day. It is currently producing about 11.6 million barrels. Any effort to accelerate production “would require investors’ blessing.”

In January, Exxon CEO Darren Woods said he was focused on the “profitability of the barrels that we’re producing” rather than “volume and volume targets.”

The push by API for immediate policy changes has little to do with the current crisis in Ukraine. The industry has made clear it  . . .

Continue reading. There’s more, including API’s strategy to fight clean energy initiatives.

Written by Leisureguy

7 March 2022 at 10:10 am

Frequently Asked Questions About World War III, Part 2

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Dave Troy has a follow-up article to his earlier article. Part 2 begins:

As an analyst of global Russian information operations, I’m often asked to offer an opinion about what’s happening with this conflict. I’ve collated some of the most common questions and answers below. These opinions are mine alone, but I’ve provided references to other sources wherever I can. This is Part 2 of a series of Frequently Asked Questions on this conflict. You can read Part 1 here.

Q: Why won’t NATO and the US implement a “no-fly” zone over Ukraine?
A: This has become a point of contention between people who think we aren’t doing enough to help Ukraine, and those who are concerned that this specific action would lead directly to nuclear escalation. If implemented, NATO aircraft would be tasked with directly shooting down Russian aircraft. Experts believe this would quickly turn nuclear. Given that Putin is looking for excuses to do so, many believe we should be careful not to give him any. It’s also a tight airspace with many friendly nations (such as Poland and Ukraine) with aircraft using the Russian MiG platform. President Zelensky has expressed frustration and disappointment, saying, “All the people who will die starting from this day will also die because of you. Because of your weakness, because of your disunity.”

Q: If Putin is just bluffing about using nukes, then why should we hesitate to act now to intervene more in Ukraine?
A: Many believe that Putin’s nuclear threats amount to bluster and posturingOthers are less sure. For my part, I think Putin will very likely use at least one nuke as either a show of force and to induce panic, and he may do so through a proxy like Iran or North Korea to add plausible deniability. He may deploy one against a lesser target, or a target inside his own country. That all said, since he is likely to escalate no matter what is done to help Ukraine, the decision not to help in Ukraine may mean that many people may die at the hands of Russia’s continuing attacks.

Q: Attacking nuclear power plants is extremely alarming; what is the real danger presented here?
A: Russian forces captured the Chernobyl power plant site and took staff hostage. That site has been offline for years, and the reactor affected by the 1986 disaster there is encased in a concrete sarcophagus. Some have speculated that the site carries strategic value because others won’t go near it (or target it with artillery) for fear of stirring up radioactive waste. The Zaporizhzhia nuclear plant, the largest in Europe, is a different type of power plant, using pressurized water, with extremely thick containment domes. This reactor design is more resilient than Chernobyl or Fukushima, with less chance of leaving fuel exposed or leading to a hydrogen or steam explosion. However, purposeful sabotage of the six reactors at Zaporizhzhia could lead to a massive incident, maybe ten times bigger than Chernobyl. However, recent reports indicate it is now under Ukrainian control again. That could obviously change. Overall, these sites don’t represent a serious risk right now but they clearly could, and also help to drive a sense of menace and alarm. Those fears may also be used to undermine support for nuclear power globally, driving continued consumption of carbon fuels for decades.

Q: What future does Russia have at this point?
A: Russia has committed suicide. By forcing the imposition of sanctions, bans, and laws which can not now be easily reversed without major changes in policy, Russia has effectively exiled itself into a state of autarky — or full isolation. While they will likely develop ways to bypass some sanctions, Russia can not return to the world stage until Putin is removed from power, and a new regime is in place that fully renounces his actions. If Putin manages to prevail in his assault on Ukraine, then Russia will have only expanded the geographical reach of its isolation. Therefore, Russia has no future under Putin. He necessarily must be removed from power if the Russian people are to survive.

Q: What does a post-Putin Russia look like? . . .

Continue reading.

Written by Leisureguy

5 March 2022 at 10:44 am

Excellent commentary on Biden’s SOTU speech by James Fallows, who was chief White House speechwriter for President Carter

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The Atlantic doesn’t have gift links, but they will allow non-subscribers to read in full a few articles a month, and this one by James Fallows is worth using that option. Fallows begins with a preface about speeches in general, and then begins his commentary on Biden’s speech. He writes:

Listening to Joe Biden give his first official State of the Union address on Tuesday night, I thought: This is strong. It is clear; it’s the right message in the right language. It reflects the speaker in an honest way. And it also brings something new to this tired form.

But each of those judgments rests on assumptions about speeches in general and State of the Union addresses in particular. So let me lay out my reasoning and then get to the details of the speech.

What makes a speech “good”? Or “effective”? Or viewed as “eloquent”? Or perhaps eventually as “memorable” or “historic”?

These are trickier assessments than they might seem, and can take time to settle in. The value and effect of a speech depend on some circumstances that a speaker can control, or at least be aware of: the message, the audience, the expected length of the speech, the expected tone, from jokey to statesmanlike. But they also depend on aspects of timing and fortune beyond anyone’s control. Winston Churchill’s “we shall fight on the beaches” pledge to Parliament in 1940 is remembered in a particular way because of how the next five years of combat turned out. As are Franklin D. Roosevelt’s “date which will live in infamy,” John F. Kennedy’s “Ich bin ein Berliner,” and Ronald Reagan’s “Mr. Gorbachev, tear down this wall.”

By contrast, George W. Bush’s “mission accomplished” declaration one month into the invasion of Iraq in 2003 is remembered in a different way, because of what happened afterward.

(I know how it feels to be involved in a statement that history has made look foolish. While working for Jimmy Carter in the White House, I was the writer on the trip where he gave a New Year’s Eve toast, in Tehran, to the shah of Iran as an “island of stability” in the turbulent sea of the Middle East. That was the official U.S. outlook at the time, which I did my best to express. Within little more than a year, the shah was out, and the Iranian revolution of Ayatollah Khomeini was under way.)

Why many different kinds of speeches can be “good,” and what makes them that way

Some speeches are meant to excite or inspire. Political-rally speeches are in this category, the more so the closer they come to Election Day. Speeches to inspire the whole nation should obviously not be partisan. For instance, JFK in 1962: “We choose to go to the moon … not because [it is] easy, but because [it is] hard, because that goal will serve to organize and measure the best of our energies and skill.” Speeches to energize the base can be partisan as hell, because voters are about to choose one side or the other. For instance, FDR just before Election Day in 1936: “[My opponents] are unanimous in their hate for me—and I welcome their hatred.”

Some speeches are meant to console or commemorate. Robert F . Kennedy’s most moving speech may have been his unscripted statement of grief and resolve, at a street corner rally before a largely Black crowd in Indianapolis, when sharing the news that Martin Luther King Jr. had just been assassinated, in April 1968. This was two months before Kennedy himself was shot dead. Ronald Reagan gave his State of the Union address in 1986 a few days after the space shuttle Challenger exploded, and he began with a tribute to the seven dead astronauts. I believe that Barack Obama’s most powerful address was his eulogy in 2015 for the slain parishioners at the Mother Emanuel Church in Charleston, South Carolina.

Some speeches are meant to explain. The example all aspire to is  . . .

Continue reading.

After his introduction, Fallows begins his commentary on Biden’s speech:

What follows is an abbreviated version of an approach I’ve tried before, of annotating the SOTU transcript. You can read the whole official speech from the White House if you prefer. I’ve used the version that was on Biden’s TelePrompter, and I’m leaving out more than half of it, indicated by an ellipsis (…) in interests of space. Comments are in bold, with the words or lines they’re referring to in italics. Here we go.

Madam Speaker, Madam Vice President, our First Lady and Second Gentleman. Members of Congress and the Cabinet. Justices of the Supreme Court. My fellow Americans. Of course, this is the first time that a president has begun with this salutation. As was true throughout the speech, Biden under- rather than oversold the moment.

… Six days ago, Russia’s Vladimir Putin sought to shake the foundations of the free world, thinking he could make it bend to his menacing ways. But he badly miscalculated.

He thought he could roll into Ukraine and the world would roll over. Instead he met a wall of strength he never imagined. An attempted “line,” which Biden sensibly moved right past rather than waiting for a response.

He met the Ukrainian people. What I am referring to as plain-style eloquence.

From President Zelenskyy to every Ukrainian, their fearlessness, their courage, their determination, inspires the world.

Groups of citizens blocking tanks with their bodies. Everyone from students to retirees, teachers turned soldiers, defending their homeland. This will not be studied for rhyme, or emphasis in delivery. But it is very powerful.

In this struggle, as President Zelenskyy said in his speech to the European Parliament, “Light will win over darkness.” The Ukrainian Ambassador to the United States is here tonight.

Let each of us here tonight in this Chamber send an unmistakable signal to Ukraine and to the world.

Please rise if you are able and show that, Yes, we the United States of America stand with the Ukrainian people. One of the performance-art aspects of SOTUs is which part of the chamber will cheer which lines. This was a graceful and appropriate way for Biden to induce a standing ovation from all.

Throughout our history we’ve learned this lesson: When dictators do not pay a price for their aggression, they cause more chaosAs a matter of sentence rhythm, this is not the way Churchill, Kennedy, et al. would have phrased it. But, once more, powerful in its intent. They keep moving.

… American diplomacy matters. American resolve matters. This could not be plainer. Nor truer, at the moment.

… [Putin] thought the West and NATO wouldn’t respond. And he thought he could divide us at home. Putin was wrong. We were ready. Here is what we didSee above.

We prepared extensively and carefully… I spent countless hours unifying our European allies. We shared with the world in advance what we knew Putin was planning and precisely how he would try to falsely justify his aggression. “I am going to tell you about the actual work of being president.”

We countered Russia’s lies with truth.

And now that he has acted, the free world is holding him accountable.

Along with twenty-seven members of the European Union including France, Germany, Italy, as well as countries like the United Kingdom, Canada, Japan, Korea, Australia, New Zealand, and many others, even SwitzerlandEven Switzerland!!!!

We are inflicting pain on Russia and supporting the people of Ukraine. Putin is now isolated from the world more than ever. I do not think we have heard these words before in a SOTU …

Tonight I say to the Russian oligarchs and corrupt leaders who have bilked billions of dollars off this violent regime: No more. Nor this word.

The U.S. Department of Justice is assembling a dedicated task force to go after the crimes of Russian oligarchs. I believe the camera panned to Merrick Garland at this point. Many people thinking, with me, Get busy with these task forces!

We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets. We are coming for your ill-begotten gainsNor these words. Nice emphasis on your.

Continue reading.

I find the Atlantic is well worth the price of the digital-only subscription — and right now there’s an even better bargain. Every issue has articles worth noting, and they also publish much along the way.

Written by Leisureguy

5 March 2022 at 10:11 am

Russian commanders who go to the front of the stalled column to get it going are killed by snipers. Read this detailed analysis.

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This twitter thread was written Trent Telenko, “Married father of four great kids, Retired US DoD Civil Servant, Section 22 Special Interest Group list admin, Chicagoboyz-dot-net history blogger.”

Read that thread. It is stunning.

And note this: “As war loomed, U.S. armed Ukraine to hit Russian aircraft, tanks and prep for urban combat, declassified shipment list shows.” That’s the headline of a report in the Washington Post by Karoun Demirjian and Alex Horton, and that’s a gift link (no paywall).

That report begins:

The United States drastically enhanced its shipments of lethal military aid and protective equipment to Ukraine as the prospect of a Russian invasion became more apparent and then a reality, according to a declassified accounting of transfers and sales reviewed by The Washington Post.

The list indicates that as early as December, the Pentagon was equipping Ukrainian fighters with arms and equipment useful for fighting inurban areas, including shotguns and specialized suits to safeguard soldiers handling unexploded ordnance. Over the last week, the Biden administration has increased such shipments, sending Stinger antiaircraft missile systems for the first time and further augmenting Kyiv’s supply of antitank Javelin missiles and other ammunition.

Taken together, thevariety, volume and potency of firepower being rushed into the war zone illustrate the extent to which the United States sought to prepare the Ukrainian military to wage a hybrid war against Russia,evenas President Biden has expressly ruled out inserting American troops into the conflict.

Western allies tightlipped about how they move military aid into Ukraine

“This is a continuous process. We are always, always looking at what Ukraine needs, and we’ve been doing this for years now,” a senior defense official told reporters Friday on the condition of anonymity under ground rules establishedby the Pentagon. “We have just accelerated our process of identifying requirements and accelerated our consultations as well with the Ukrainians, talking to them daily, as opposed to periodic meetings that we did before this crisis.”

John Kirby, the Pentagon’s chief spokesman, declined to comment. The list of materiel reviewed by The Post generally tracks with the administration’s broad public statements about the transfers. It does not contain any information designated classified. . .

Continue reading (and no paywall).

You may recall President Trump halted military aid to Ukraine to try to force Ukraine President Zelensky to say that he was investigating the Bidens. Zelensky wouldn’t do that (because there was no investigation and no reason to investigate), so Trump held up the military aid (which helped his buddy Putin).

Written by Leisureguy

4 March 2022 at 10:25 pm

Heather Cox Richardson’s interview with President Biden

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Heather Cox Richardson writes:

Every day, people write to me and say they feel helpless to change the direction of our future.

I always answer that we change the future by changing the way people think, and that we change the way people think by changing the way we talk about things. To that end, I have encouraged people to speak up about what they think is important, to take up oxygen that otherwise feeds the hatred and division that have had far too much influence in our country of late.

Have any of your efforts mattered?

Well, apparently some people think they have. Last week, President Biden’s team reached out to ask if I would like some time with him to have a conversation to share with you all.

On Friday, February 25, I sat down with the president in the China Room of the White House to talk about American democracy and the struggles we face.

It was an amazing time to be able to talk to the President. Russian president Vladimir Putin had just attacked Ukraine, Biden was preparing to give his first State of the Union address, and the president had just made the historic announcement of the nomination of Judge Ketanji Brown Jackson for a seat on the Supreme Court.

But I didn’t want to ask the president about anything I could learn from other publicly available sources—I already read those every day to write my Letters from an American. I wanted to hear from a historic figure in a historic time about how he thinks about America in this pivotal moment, to put the specifics of what he does in a larger context.

In my books, I have argued that throughout our history, America has swung between the defense of equality outlined in the Declaration of Independence and the defense of private property outlined in the Constitution.

Our peculiar history of racism has meant that every time it seems we are approaching equality before the law, those determined to prevent that equality have turned people against it by insisting that government protection of equality will cost tax dollars, thus amounting to a redistribution of wealth from those with property to those without. That is, if Black and Brown Americans, and poor people, are permitted to vote, they will demand roads and schools and hospitals, and those can be paid for only by taxes on people with money. In this argument, an equal say in our government for all people amounts to socialism.

With this argument, those defending their property turn ordinary Americans against each other and take control of our political system. Once in power, they rig the system for their own benefit. Money flows upward until there is a dramatic split between ordinary people and those very few wealthy Americans who, by then, control the economy, the government, and society.

This point in the cycle came about in the 1850s, the 1890s, the 1920s, and now, again, in our present.

In the past, just when it seemed we were approaching the end of democracy and replacing it with oligarchy—and in each of these periods, elites literally talked about how they alone should lead the country—the American people turned to leaders who helped them reclaim democracy.

We know these leaders from our history. Presidents Abraham Lincoln, Theodore Roosevelt, and Franklin Delano Roosevelt all have entered the pantheon of our leaders because of their defense of democracy in the face of entrenched power. But all of those presidents became who they were because they rose to the challenge of the pivotal moments in which they lived. They worked to reflect the increasingly loud voices of the majority of the American people.

James Buchanan, William McKinley, Herbert Hoover, and Donald Trump did not.

And now President Biden stands at another pivotal moment in our history. What he does in this moment will reflect what the American people demand from his leadership.

So do your voices matter? He wouldn’t have taken the time in the midst of such an important day in America to talk to you if they didn’t.

Here is what he has to say: 

Written by Leisureguy

4 March 2022 at 9:51 pm

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