Obama and the Integrity Gap: The Favor Factory

E. The Favor Factory

With the expansion of federal intervention in the economy that will inevitably follow the current financial crisis – ranging from the $700 billion financial industry bailout to the $25 billion auto industry bailout to the federal government investing billions directly in major banks – there will be even more opportunities than usual for the next Administration to use federal dollars to reward friends and cronies instead of serving the taxpayers. Indeed, House Democrats tried in the bailout package to earmark proceeds to go to Obama’s old friends at ACORN, and succeeded in subsidizing ACORN in the housing bill that passed in July. It’s important that the next White House be resistant to opening the favor factory for business.

Senator Obama now claims that he will be a good steward of federal taxpayer money – such a good steward, in fact, that he’ll be able to cut spending enough to offset every dollar of his many hundreds of billions of dollars of planned new spending programs. But his record throughout his career shows him to be a man who has always been quite liberal in every sense of the word in using public money and private charitable money to reward his friends, and who is wholly disinclined to saying “no.” Obama knows how the favor factory works, and he isn’t shy about using it.(1) Pork and Earmarks

As I noted in Part I of this series, one of the major controversies of the last several years in American politics has been pork barrel spending, and specifically “earmarks” – legislative directions that money be routed to particular projects. Earmarks are not an enormous part of the budget – in the last debate, Obama dismissed $18 billion as being basically chump change – but they contribute to governmental bloat, and more problematically the reasons why politicians like directing money to benefit particular people often get them in ethical or legal trouble.

As I also discussed in Part I, on the most notorious pork project in recent years, Obama voted against Tom Coburn’s effort to strip funding from the “Bridge to Nowhere” and send it to victims of Hurricane Katrina, presumably out of fear that such a vote would bring down retaliation on his own pork barrel. That said, Obama does deserve some credit on one corner of Coburn’s Porkbusters campaign: when Coburn needed a Democratic sponsor in 2006, Obama stepped up and co-sponsored the Federal Funding Accountability and Transparency Act of 2006, a/k/a the Coburn-Obama bill, capping off the Porkbusters crusade for earmark transparency by creating an internet database of federal spending requests; as I wrote at the time:

H. Res. 1000 and the Coburn-Obama bills don’t cut a dime by themselves, but anybody who knows Washington can tell you that changing the procedures is half the battle; by providing increased public and media oversight over earmarks and pork-barrel spending – as well as simply a better mechanism for Members to see what they are voting on and at whose behest – the rule and the bill together provide a first step towards getting the pork problem under at least the beginnings of control.

While the indefatigable Coburn carried the laboring oar on the bill – as he did in the battle against the Bridge to Nowhere – Obama certainly deserves some credit for co-sponsoring it, a move that was not entirely popular in the Senate or within his own caucus. Of course, the main opposition at the time was Old Bull GOP Senators like Ted Stevens and Trent Lott, not exactly Obama’s best buddies. In any event, Obama’s record on the spending itself is nonetheless poor.

For his Senate career, Obama has requested nearly $1 billion in earmarked spending all by himself, “$931.3-million… nearly a million dollars for every [working] day that Obama’s been in the United States Senate.” Obama repeatedly voted against Coburn’s initiatives to rein in pork and earmarks, including an effort to re-route bike path funding to bridge safety after the bridge collapse in Minnesota. Looking at the watchdog groups that follow this stuff (these are conservative groups, but they don’t hesitate to take on Republicans who go astray on these issues), Citizens Against Government Waste gave Obama a lifetime rating of 22 out of 100, and the Club for Growth rated him a 33 out of 100 for 2007. And the earmarking was already a habit from his State Senate days, as “Obama doled out more than $3.6 million in state grants in just the last half of his state legislative career, records show…Records from 1997 to 2000 weren’t available.” Another report states that “Obama awarded about $6 million for everything from literacy programs and park improvements to drill team uniforms and jazz appreciation events.”

When you turn to specific cases, Obama’s record doesn’t get prettier:

+In 2001, Obama was desperate for cash after maxing out his credit cards to cover debts from his unsuccessful run for Congress. Enter the kind of donor who seems to come out of the woodwork whenever Obama needs help:

Chicago entrepreneur Robert Blackwell Jr. paid Obama an $8,000-a-month retainer to give legal advice to his growing technology firm, Electronic Knowledge Interchange. It allowed Obama to supplement his $58,000 part-time state Senate salary for over a year with regular payments from Blackwell’s firm that eventually totaled $112,000.A few months after receiving his final payment from EKI, Obama sent a request on state Senate letterhead urging Illinois officials to provide a $50,000 tourism promotion grant to another Blackwell company, Killerspin.Killerspin specializes in table tennis, running tournaments nationwide and selling its own line of equipment and apparel and DVD recordings of the competitions. With support from Obama, other state officials and an Obama aide who went to work part time for Killerspin, the company eventually obtained $320,000 in state grants between 2002 and 2004 to subsidize its tournaments.

Yes, that’s right: taxpayer money for ping-pong tournaments. All for the greater good of retiring Obama’s campaign debts. How critical was the money from Blackwell to Obama’s financial well-being?

Obama’s tax returns show that he made no money from his law practice in 2000, the year of his unsuccessful run for a congressional seat. But that changed in 2001, when Obama reported $98,158 income for providing legal services. Of that, $80,000 was from Blackwell’s company.

+Obama rewarded Fr. Pfleger with a $225,000.00 earmark for programs at Pfleger’s church when Obama was a State Senator, and “Pfleger gave Obama’s campaign $1,500 between 1995 and 2001, including $200 in April 2001, about three months after Obama announced $225,000 in grants to St. Sabina programs.”

+Obama managed $200,000 for “a venture capital fund linked to the Rev. Jesse Jackson” and his Rainbow/PUSH organization.

+“Englewood got $100,000 for its botanical garden even though it was outside of his state Senate district. Obama needed votes from the neighborhood when he ran for Congress – but after he lost, he reneged on a promise to complete the project. Nothing but a plywood gazebo and a field of weeds sits on the garden plot now.”

+In one case, Obama basically bought off an organization founded by a guy who had run against him three years earlier:

In 2001…Obama steered $75,000 to a South Side charity called FORUM Inc., which promised to help churches and community groups get wired to the Internet. Records show five FORUM employees, including one who had declared bankruptcy, had donated $1,000 apiece to Obama’s state Senate campaign.As the grant dollars were being disbursed to FORUM, the Illinois attorney general filed a civil lawsuit accusing the charity’s founder of engaging in an unrelated kickback scheme. Just days after the suit was filed, Obama quietly returned the $5,000 in donations.

+Even some of the more reputable-sounding earmarks have something in them for Obama’s friends:

His campaign’s list said the senator had secured $1.3 million of an $8 million request in 2006 for a high-explosive technology program for the Army’s Bradley Fighting Vehicle. The list said the program was overseen by General Dynamics.One of Mr. Obama’s top supporters, James S. Crown, serves on the board of General Dynamics, a military contractor. Mr. Crown is a member of Mr. Obama’s national finance committee.Mr. Obama also secured $750,000 of a $3 million request for renovation of a space center named for Mr. Crown’s grandfather, Henry Crown, at the Museum of Science and Industry in Chicago.

And there’s more

Senator Obama’s ties to the Crowns run deeper than one corporate earmark. Paula and Lester Crown are also both directors of the Children’s Memorial Hospital in Chicago, an organization for which Senator Obama has requested a total of $7 million in earmarks since 2006. The first was a request for $4 million in 2006 to fund the Children’s Memorial Medical Center’s Electronic Medical Record Project, and the second was a request for $3 million in 2008 to build an intensive care unit. All told, one third of the directors at CMH, including the Crowns, have donated $95,124 to Barack Obama’s senate campaign, and $119,137 to his presidential campaign. These include Director Vicki Heyman, who along with her husband is a prominent Democratic fundraiser and bundler for the Obama campaign. In total, bundlers on the CMH board and their relatives, the Crowns included, have raised and pledged a total of at least $1.15 million for Obama for America. To top it all off, James Crown and his wife Paula are both bundlers for the presidential campaign, and are members of his National Finance Committee. James Crown was also on Barack Obama’s 2004 campaign finance committee, and is currently co-chair of his Illinois finance committee.

+As McCain has noted, Obama in 2008 managed to snag more than $3 million in federal dollars for a projector for a planetarium in Chicago, after requesting $300,000 for the same project in 2006. How’d they get his attention? “The Chairman and two of the Vice Chairman of the Adler Planetarium Board of Trustees raised a total of almost $250,000 for Sen. Obama’s 2008 Presidential campaign. The Adler Planetarium was probably pleasantly surprised when they found that their earmark increased by $2.7 million dollars, in other words, by a factor of ten.” *

+“As a state senator, Democrat Barack Obama awarded $75,000 in government grants to a Chicago social service organization led by a rabbi who is also his wife’s cousin, records show.”

(2) Spending

In contrast to the tough and unpopular line-item veto decisions made by Sarah Palin even in good budgetary times in Alaska, Obama’s spending record in Illinois shows a man incapable of saying “no” to domestic spending, even stealing a famous 1999 line from George W. Bush (I noted this previously here):

In a 2007 speech to Al Sharpton’s National Action Network (NAN), Obama touted his Illinois legislative experience and challenged members of Sharpton’s group to find a candidate with a better record of supporting the issues they cared about. …Intrigued by Obama’s challenge to Sharpton’s group, Randolph Burnside, a professor of political science, and Kami Whitehurst, a doctoral candidate, both at the Southern Illinois University-Carbondale, decided to put Obama’s Illinois record to the test. The two scholars made a study of bills sponsored and cosponsored by Obama during his Illinois State Senate career.Published in the Journal of Black Studies, the results are striking. Burnside and Whitehurst produced two bar graphs, one representing bills of which Obama was the main sponsor, arranged by subject, and a second displaying bills Obama joined as a cosponsor. In the chart depicting bills of which Obama was the main sponsor, the bar for “social welfare” legislation towers over every other category. In the chart of Obama’s cosponsored bills, social welfare legislation continues to far exceed all other categories, although now crime-related bills are visibly present in second place, with regulation and tax bills close behind. According to Burnside and Whitehurst, other than social welfare and a bit of government regulation, “Obama devoted very little time to most policy areas.”This brings us to what is perhaps the most striking result of our tour through Obama’s Springfield days. Conventional wisdom has it that John McCain holds a political advantage over Obama on war and foreign policy issues, while Obama is favored to handle the economy. Yet Obama’s economic experience is largely limited to social welfare spending. Indeed, precisely because of his penchant for spending, Obama’s fingerprints are all over Illinois’s burgeoning fiscal crisis. The Illinois state budget has been in an ever-widening crisis since 2001. In an April 2007 report, a committee of top Chicago business leaders warned that the state was “headed toward fiscal implosion.” Illinois’s unfunded pension debt is the highest in the nation, while Illinois is sixth in the nation in per capita tax-supported debt. Yet the Illinois General Assembly-now controlled by Obama’s Democratic allies-churns out at will exactly the sort of spending programs Obama pushed for, with only partial success, under the Republicans. The result is a fast-growing gap between revenues and expenditures (unimpeded by the statutory requirement of a balanced budget), rising fears of fiscal meltdown, finger-pointing, and political gridlock.A watershed moment in Illinois’s fiscal decline came in 2002, when crashing receipts and Democratic reluctance to enact spending cuts forced Republican governor George Ryan to call a special legislative session. While Ryan railed at legislators for refusing to rein in an out-of-control budget, the Chicago Tribune spoke ominously of an “all-consuming state budget crisis.” Unwilling to cut back on social welfare spending, Obama’s chief partner and political mentor, senate Democratic leader Emil Jones, came up with the idea of borrowing against the proceeds of a windfall tobacco lawsuit settlement due to the state.This idea sent the editorial pages of the St. Louis Post-Dispatch and the Chicago Tribune into a tizzy. Editorialists hammered cut-averse legislators for “chickening out,” for making use of “tricked-up numbers,” for a “cowardly abdication of responsibility,” and for sacrificing the state’s bond rating to “short-term political gains.” As critics repeatedly pointed out, borrowing against a onetime tobacco settlement-instead of balancing the budget with regular revenues-would be a recipe for long-term fiscal disaster.What was Obama doing while all this was going on? He was promoting the tobacco securitization plan in his Hyde Park Herald column, railing against the governor in the Defender for balancing the budget “on the back of the poor,” and voting to override cuts in treasured programs like bilingual education. Actually, far from “balancing the budget on the backs of the poor,” the governor had trimmed evenly across all the state’s most expensive programs. In the end, Ryan did force a number of cuts, yet the resistance of Obama and his allies took a toll. When, just a year later, Democrats added control of the governorship and state senate to their existing control of the house, they revealed that the state deficit had reached $5 billion-far larger than most had feared. Since then it’s been a swift downhill tumble toward fiscal implosion for Illinois.

Obama hasn’t been better in Washington – to pick one egregious example, he voted for the appalling farm bill. Obama remains a major supporter of the ethanol boondoggle (see Freddoso pp. 92-93) – the issue on which every major presidential candidate but John McCain has kowtowed in order to compete in the Iowa caucus – and perhaps not coincidentally, Obama is very closely tied to the ethanol industry, and “briefly provoked a controversy by flying at subsidized rates on corporate airplanes, including twice on jets owned by Archer Daniels Midland, which is the nation’s largest ethanol producer and is based in his home state.” (Now it turns out that even his vaunted “95%” tax cut plan consists largely not of tax cuts but of disguised social welfare spending, by cutting checks to people who currently pay no taxes.)

(3) Housing

You are probably familiar by now with Obama’s role in joining with Senate Democrats to resist needed reforms of the government-sponsored enterprises, Fannie Mae and Freddie Mac, and the role that played in the current housing crisis, as well as Obama’s status as the largest annual recipient of Fannie/Freddie campaign cash, his tabbing of one Fannie CEO to head his veep vetting process and another’s role (if you believe him) as an Obama economic advisor. *

Some may view this as somehow an odd coincidence, that Obama was so especially popular with these enterprises. But if you have read this far, you’ve undoubtedly noticed how many of Obama’s shady associations and grubby favors have involved housing interests. Obama’s in this all the way. For example, Obama’s old friends at ACORN likewise have their hands in the subprime debacle:

ACORN Housing Corporation (AHC) was beyond knee-deep in the Fannie Mae and Freddie Mac failures which have riveted our economy. Promoting an ACORN housing development in Texas on its website in 2006, ACORN boasted “in addition to providing access to AHP grants, ACORN’s lending partners provide low cost, easier to qualify for mortgage loans.”

* Or consider this April 1995 Chicago Sun-Times description of ACORN’s pitch to home buyers at a time when Obama was pushing his foundations to expand funding for ACORN: “You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” The Stanley Kurtz article has much more on ACORN’s specific efforts to influence Fannie and Freddie to loosen credit standards for subprime housing loans, including this:

This sweeping debasement of credit standards was touted by Fannie Mae’s chairman, chief executive officer, and now prominent Obama adviser James A. Johnson. This is also the period [1993-95] when Fannie Mae ramped up its pilot programs and local partnerships with ACORN, all of which became precedents and models for the pattern of risky subprime mortgages at the root of today’s crisis. During these years, Obama’s Chicago ACORN ally, Madeline Talbott, was at the forefront of participation in those pilot programs, and her activities were consistently supported by Obama through both foundation funding and personal leadership training for her top organizers.Finally, in June of 1995, President Clinton, Vice President Gore, and Secretary Cisneros announced the administration’s comprehensive new strategy for raising home-ownership in America to an all-time high. Representatives from ACORN were guests of honor at the ceremony.

And of course, Obama in private practice participated in litigation against a major national bank to force them to extend more loans to minorities (I have no doubt that the borrowers he represented were not prime borrowers or the bank would have been much happier for their business). *

(4) Cycles of Money

As should be clear from the discussion of his ties to radicals, Obama has also benefitted from the support of those to whom he directed private funds entrusted to him. During his time on the Woods Fund board, he spread cash around to many community organizations, and lo and behold:

Dozens of the board members and officials from these organizations in turn would donate money, in many instances up to the legal limit, for Obama’s Senate and Presidential races between 2004 and 2008.For example the Woods Fund between 1999 and 2002 granted $60,000 to BPPPI. Board member and executives donated at least $16,950 to Obama’s political campaigns. The Woods Fund granted the Center of Neighborhood Technology $150,000 between 1999 and 2002. Obama received over $24,000 in campaign donations from its officials. And in turn Obama made sure to seek earmarks on their behalf once he reached the U.S. Senate.

(5) Racial Favoritism

Obama in Chicago was likewise a strong proponent of using strict race-based quotas and set-asides to steer government contracting along racial lines, a practice that catered to the narrowest and most provincial interests of his constituents:

In 2004, a U.S. District Court disallowed the ordinance under which Chicago required the use of at least 25 percent minority business enterprises and 5 percent women’s business enterprises on city-funded projects. In the immediate aftermath of the ruling, Obama and Jesse Jackson were among the prominent voices calling for a black leadership summit to plot strategy for a restoration of Chicago’s construction quotas. Obama and his allies succeeded in bringing back race-based contracting.