Tag Archives: congress

Credit Where Credit Is Due

One of the unfortunate effects of our corrupt and paralyzed political structure is the “drowning out” effect, sometimes described as Washington “sucking the oxygen out of the room.” While our attention is fixated on the more dramatic consequences of our national government’s “brokenness,” we fail to notice the harms being done by the multitude of problems that government is simply not fixing.

One of those is the way creditworthiness is measured.

There’s no doubt that credit card companies charge excessive rates of interest. But as scholars at the Brookings Institution point out, simply legislating a cap would actually compound the problem.

When does the interest rate a lender charges cross the line from economically justified to immoral? Societies have struggled with this question since biblical times. Last week, Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) took a crack at this puzzle, proposing to cap credit card interest rates at 15 percent. They’re concerned that the U.S. credit system traps working families with unsustainable debt. We share their concern, but their proposal uses a blunt instrument to attack a nuanced problem.

The Loan Shark Prevention Act, as the new legislation is called, is likely to hurt the people it’s designed to help, driving the market away from consumers with low credit scores. Some people may have their interest rates reduced, but many would no longer have access to credit at any price. Banks have been clever in figuring out how to hide credit in fees, as anyone who has paid $35 for an overdraft knows.

Instead, the authors propose making affordable credit accessible to a much larger group, by fixing what they identify as “the flawed scoring system that allocates credit.”

Our current system decides who gets credit and at what price using algorithms that analyze a person’s credit history and calculate a credit score. FICO, the most common credit score, employs a range between 300 and 850. There is no universally accepted definition of what constitutes a prime or subprime credit score but, generally, people with scores above about 680 are rewarded with cheap credit and high borrowing limits. Those classified as either near-prime or subprime, whose scores largely fall below 680, have a tougher time accessing and paying for credit.

The apparent objectivity of the algorithm masks a whole host of issues. A peek behind the credit-scoring curtain reveals that, as in “The Wizard of Oz,” there are humans feeding imperfect information into the machine. You could be the most creditworthy person on the planet, but if you lack a credit history, are a young adult or a recent immigrant, or had financial hardship in the past five years, your score will be low. Credit reports are rife with errors: One out of 5 Americans has a material error on their score.

I recently encountered this precise circumstance with my granddaughter-in-law: she is young and had virtually no credit history. It wasn’t bad credit, it was no credit, because she had been prudent and avoided debt. No credit became a real problem when she and my grandson applied for a mortgage. (Even more maddening, one of the three reporting agencies kept telling the bank her credit was “frozen”–whatever that means–but continued to insist to her, during her multiple calls to correct the issue, that it wasn’t.)

The Brookings scholars write that “Congress should start examining this system and aggressively pushing for its improvement.”

Lawmakers should push for credit-scoring formulas that take a wider range of data into consideration. Paying a mortgage on time improves your credit score, but paying your rent on time does not, because mortgages are tracked and rents generally are not. That’s just not fair…

The Consumer Financial Protection Bureau estimates that 45 million Americans lack the data that credit bureaus use to create a credit score. If you don’t have a score, it can be very hard to get a loan, rent an apartment or persuade an employer to hire you. Credit scores have become an essential component of what Princeton sociologist Frederick Wherry calls “financial citizenship” — the ingredients necessary to participate fully in the economy and civil society.

If we had a functioning Congress, this is one of the multiple tasks to which they should attend. But of course, we don’t. Right now, Mitch McConnell (aka the most evil man in America) is preventing the Senate from even considering one hundred bills that have been passed by the House.

We have a legislature that is incapable of doing anything, and an Administration trying its best to undo what was accomplished in the past. We aren’t even a banana republic: we’re a failed state.

Corruption And The Piety Party

Over the past few years, surveys have documented the growth of the so-called “nones”–Americans who have abandoned religion. Some are atheists or agnostics, others simply see religion as irrelevant to their lives. For many, that irrelevancy is the result of distaste for the hypocrisy and amoral behaviors of many self-described “pious” people.

I thought about the distance between ostentatious religiosity and ethical behavior when I read a Dana Milbank column in the Washington Post, titled “The Unimpeachable Integrity of the Republicans.”The GOP, as we all know, has become the piety party–Vice-President Mike Pence is its perfect, smarmy embodiment.

Milbank wasn’t addressing Republican faux religiosity–he was just marveling at the efforts of deeply dishonest Representatives to impeach Deputy Attorney General Rosenstein. As he noted, tongue-in-cheek, the charges are serious: inappropriately redacting lines in documents turned over to Congress by the Justice Department, and explaining the legal basis upon which the department is declining to produce others. Horrific behavior! I may swoon…

Redacting the price of a conference table is clearly a far more serious offense than those committed by other members of the Trump Team: Commerce Secretary Wilbur Ross has been accused by former associates of stealing roughly $120 million; former EPA Chief Pruitt got a bargain condo rental from a lobbyist’s wife, used his job to find work for his wife and had taxpayers buy him everything from a soundproof phone booth to  moisturizing lotion.

Who else doesn’t merit impeachment?

Not the former national security adviser who admitted to lying to the FBI,not the former White House staff secretary accused of domestic violence, not the presidential son-in-law who had White House meetings with his family’s lenders, not the housing secretary accused of potentially helping his son’s business, not the many Cabinet secretaries who traveled for pleasure at taxpayer expense, not the former Centers for Disease Control and Prevention director who bought tobacco stock while in office.

And certainly not the president, whose most recent emolument bath was poured by Saudi Arabia’s crown prince: Bookings by his highness’s entourage spurred a spike in the quarterly revenue at the Trump International Hotel in Manhattan.

None of these “public servants” generated the indignation being focused on Rosenstein the Redactor.

Milbank helpfully described the pious paragons so determined to expel this scofflaw from governance–the same Republicans “so above reproach” that one of their first votes was an attempt to kill the House ethics office. He began by identifying some who are regretfully  no longer available:

Rep. Blake Farenthold (R-Tex.), an obvious candidate, resignedover his use of public funds to settle a sexual-harassment lawsuit.

Rep. Pat Meehan (R-Pa.), another ideal choice, resigned after word got out of a sexual-harassment settlement with a staffer the married congressman called his “soul mate.”

Rep. Tim Murphy (R-Pa.) also can’t be of use. He resignedover allegations that he urged his mistress to seek an abortion.

Rep. Trent Franks (R-Ariz.) likewise won’t be available. He quit when a former aide alleged that he offered her $5 millionto have his child as a surrogate.

But never fear–as Milbank demonstrates, the GOP has a truly impressive bench.

There’s Rep. Chris Collins (R-N.Y.), who remains “tentatively available” despite his arrest this week for insider trading, along with the five other House Republicans who invested in the same company but haven’t been charged yet. There’s also Rep. Jim Jordan (R-Ohio), “assuming he has free time”–he’s battling allegations that he covered up sexual misconduct when coaching at Ohio State.

Others who could judge Rosenstein: Rep. Greg Gianforte (R-Mont.), who pleaded guilty to assault after body-slamming a reporter; Rep. Joe Barton (R-Tex.), who is retiring after a naked photograph of him leaked online; and Rep. Duncan D. Hunter (R-Calif.), who is under investigation by the FBI over the alleged use of campaign funds for his children’s tuition, shopping trips and airfare for a pet rabbit.

Nunes himself is battling allegations that he got favorable terms on a winery investment and used political contributions to pay for basketball tickets and Las Vegas trips.

Eighty-one percent of white Evangelicals voted for Trump, and research suggests their support for him and his band of thugs and thieves remains strong. No wonder people who actually care about ethics and morality are repelled by “faith.”

The Real Constitutional Crisis

As anyone who reads my blogs and columns–or who has ever been a student in one of my classes–can attest, I have respect bordering on reverence for the American Constitution. But it is becoming painfully clear that some of the governing mechanisms required by that founding document no longer serve us. The Constitution was crafted, after all, to address the concerns of a very different age.

The dysfunctions of the system have been accelerating for some time, culminating in today’s parody of responsible government.

A recent article in Commentary Magazine focused on the undeniable fact that Congress is broken;

It is hard to avoid attributing every dysfunction of the moment to Donald Trump’s peculiar mix of reckless talk and often feckless action. But judged on a scale of institutional breakdown, the presidency—even this presidency—is not our biggest problem….

The budget process has never been so hobbled. Not only did we come close to an unprecedented government shutdown during single-party control of Congress and the presidency, but this year has also marked the first time in the four-plus decades since the modern budget process was created that neither chamber has even considered a budget resolution.

And the trouble didn’t start in just the past few years. Presidential hyperactivity in recent decades has masked a rising tide of dysfunction—giving us policy action to observe and debate while obscuring the disorder that was overtaking our core constitutional infrastructure. It kept us from facing what should be an unavoidable fact: Congress is broken.

As the author points out, whatever measure you apply–legislation passed, public approval, member satisfaction, even just committee work or each house’s ability to live by its own rules–will lead you to the same conclusion. And while there are many reasons for the institution’s abject failure to perform, the Constitutional language is among them.

The Constitution gives the Congress powers but not responsibilities. The president is required to execute the laws and tasked with responding to changing world events on the country’s behalf. The courts have to consider cases and controversies put before them and apply the laws accordingly. But while the general scope and reach of the Congress’s authorities are laid out in Article I, the institution is not really told what it must do within that scope. That’s because the assumption was that Congress would naturally seek to control things and run as far and as hard in pursuit of power as the Constitution allowed, so that only boundaries were needed.

As everyone who has studied the Constitutional Convention knows, the Framers worried most about the legislature (the “most dangerous branch”), and the prospect that it would run rampant.

Today’s Congress simply defies that expectation. It suffers from a malady the framers never quite imagined when they thought about politics: a shortage of ambition. Members are certainly eager to retain their offices, but they seem oddly indifferent to using those offices.

The article goes on, and I encourage you to click through and read it, but even though I think much of the analysis is accurate, I also think it is incomplete. The fecklessness of our current political class is also fostered by other structural defects required or permitted by the Constitution: the Electoral College and the primary authority of state governments for elections and redistricting, to name just two.

The problem is, if Americans were to engage in a redesign of the Constitution–if efforts to hold another Constitutional Convention (an effort currently underway) were to succeed–it is almost certain that the damage done would vastly outweigh any improvements. The people most eager to rewrite our national charter are precisely the people who shouldn’t be allowed near it. It isn’t just the theocrats and the “states rights” bigots, worrisome as they are, but well-meaning folks who have very limited understandings of economic and social realities–the “balanced budget” advocates and libertarian opponents of regulation and social welfare programs, among others.

Legal structures are inevitably reflective of deep-seated cultural assumptions, and cultural changes come slowly. Until such time as an effort to modernize the Constitution can be undertaken in a less politically toxic, uninformed and polarized environment–undertaken by civically-literate, knowledgable and public-spirited “renovators”–the best we can do is “eject and elect.”

We need to eject from Congress the sorry excuses who are currently failing to act responsibly, and we need to elect people who are willing and able to discharge their responsibilities.

We need to vote as if our futures depend upon it. Because they do.

 

Controlling Our Brave New (Digital) World

Now that Net Neutrality rules have been eliminated by Trump’s FCC, the question is: how will the repeal affect ordinary Americans? What consequences will be seen by the millions of Americans who turn increasingly to the Internet for everything from information to entertainment to commerce?

The Brookings Institution has at least a preliminary answer.

On June 11, 2018, the Federal Communications Commission’s repeal of the Open Internet Order—the net neutrality rules—went into effect. In the wake of this change, Americans are wondering how the repeal will affect them, and what it means for the future of internet access. Though consumers may not see changes quickly, the shift on net neutrality undermines the nation’s history on network regulation, creating a new era in how these networks operate in America.

So–in this brave “new era,” what can we expect?

The “quick and dirty” answer is: it depends. For one thing, there is a pending court challenge to the FCC’s authority to repeal Net Neutrality. For another, the Senate has passed Senate Joint Resolution 52, officially disapproving the repeal.  (Under the Congressional Review Act,  Congress can undo recently created rules by federal agencies.)

It still has to pass in the House, and then be signed by the president, which makes its prospects dicey, but perhaps Mueller will have completed his investigation…

That said, the need for a vote in the House should make protection of Net Neutrality an issue in the upcoming midterms. Every Congressional candidate should be asked whether they will vote to reinstate the rules. In December of last year, the Hill reported that 83% of Americans support Net Neutrality.

The pending court case is a consolidation of twelve separate challenges to the FCC’s authority to repeal the rules. The 12 lawsuits were filed by more than three dozen entities, including state attorneys general, consumer advocacy groups, and tech companies.

(If there is a Justice Kavanaugh sitting on the Supreme Court, and the case reaches the high court, its prospects dim: Kavanaugh is on record opposing Net Neutrality on the grounds that Internet providers are publishers, and protected from government interference by the First Amendment. Equating companies like Verizon and AT&T with media outlets like the New York Times requires some convoluted logic. )

More encouraging, a number of states aren’t waiting for Congress or the courts. California, not surprisingly, looks to be first out of the gate with a “robust” protection of Net Neutrality, but a number of other states are in the process of crafting similar bills.

The latest version of the bill restores provisions that would prevent broadband providers from exempting some services from customers’ data caps and would ban providers from charging websites “access fees” to reach customers on a network or blocking or throttling content as it enters their networks from other networks, according to a fact sheet released by Wiener, Santiago, and state senator Kevin de León.

The enumerated practices are those that big telecom companies are expected to engage in now that the FCC has repealed national protections.

The new version of the bill needs to be approved by both houses of the California Legislature, then be signed by Governor Jerry Brown. From there, it could face legal challenges from the FCC, which prohibited states from adopting their own net neutrality protections when it repealed the national net neutrality rules. During the press conference, Santiago said the California bill would stand up to legal scrutiny. Legal experts have told WIRED they are unsure whether the FCC has authority to preempt state law on the issue.

As 83% of Americans understand (at least in this context), this administration’s indiscriminate war on all regulatory activity more often than not just favors big business over the rest of us.