Reclaim Democracy!

Once Foes of Big Tobacco, States Have Been Hooked

by

By Gordon Fairclough and Vanessa O’Connell
First published in The Wall Street Journal, April 2, 2003

Editor’s note: Two years ago, we wrote about the perverse incentives that would be created by linking states’ income to the success of the cigarette industry. Now several states are helping the most powerful cigarette corporation stay in business to addict more new customers to the world’s most widely fatal drug.

State governments, once among the tobacco industry’s fiercest foes, now find themselves in an unusual position: They are poised to try to rescue the country’s biggest cigarette maker in one of its darkest hours.

In 1996, Washington state Attorney General Christine Gregoire sued the country’s biggest cigarette companies, eventually extracting hundreds of millions of dollars in settlement money for her state’s citizens. “The tobacco industry has targeted our kids, withheld safer products and deliberately misled the public about the safety of smoking,” Ms. Gregoire said at the time.

Her efforts, along with those of other state attorneys general, constituted the first large-scale, successful legal assault on the tobacco industry. Opening the door for a slew of additional litigation, the state suits changed the terms of the debate on the cigarette business, shattering the aura of invincibility that had surrounded tobacco companies. One should visit benzo detox at Muse to know the extent of how these drugs can flip one’s lifestyle upside down completely thus finding no way to return back to normal.

Now, however, Ms. Gregoire and other state attorneys general may go to court to protect Philip Morris USA, the maker of Marlboro. At issue: an Illinois state judge’s order that Philip Morris, owned by Altria Group Inc., post a $12 billion bond in order to appeal a massive defeat in a class-action lawsuit. Philip Morris USA suggested the bond requirement could force it into bankruptcy court. Until a recent image makeover, Altria was known as Philip Morris Cos.

The enormous bond “could create a chilling effect on the ability of the defendant to appeal,” Ms. Gregoire said last week in a press conference. And, more importantly, it “could deal a significant, unnecessary financial blow to the states.”

Altria’s current plight, rife with irony and contradiction, demonstrates how private and public interests can become entangled in surprising ways. The very states that won huge tobacco settlements in 1997 and 1998 became hooked on the money, which for many states is staving off budgetary catastrophe. The Illinois court order threatens the tobacco cash flow and has sent the states scurrying to switch sides.

All of this has angered public-health activists and some of the attorneys general who were part of the settlements. “Certainly many of us never anticipated that states would become addicted to the tobacco money as a way to finance their operations,” said Scott Harshbarger, who was attorney general of Massachusetts at the time of the settlements. “It’s a perversion of the intention of the litigation, and it’s very unfortunate, both as a matter of public policy and a matter of health policy.”

The settlements didn’t restrict how states could spend the tobacco money. But the purpose of the state lawsuits was to generate funds to cover public-health costs and smoking-prevention programs, not general budget needs, Mr. Harshbarger said.

What changed? Under the tobacco settlements of the late 1990s, major cigarette manufacturers agreed to pay the states a total of $246 billion over 25 years to settle lawsuits. The companies also agreed to a series of restrictions on the way they sell cigarettes. The settlements have given state governments a huge additional interest in the continued financial health of the tobacco industry, especially in these days of declining tax revenues and widening state budget deficits. Many states also have relied increasingly on cigarette-excise taxes.

Philip Morris, for its part, is aggressively playing on the states’ dependence. The company is due to pay $2.5 billion to the states by April 15 but is warning it may not be able to do so because of the Illinois bond order. Philip Morris is responsible for roughly half of the yearly settlement payment to the states. Its annual payment is usually made early, on March 31, but on Monday, the states didn’t get their fix.

‘Real Money’

William H. Sorrell, the Vermont attorney general, said he has already warned the state’s governor and legislators that “they might not be getting money they have already spent” — $13 million, in Vermont’s case. Said Mr. Sorrell: “Thirteen million dollars is real money in Vermont.”

Several states that had planned to issue bonds backed by expected tobacco-settlement payments were scrambling to come up with new ways of raising money to close budget deficits. Virginia’s treasurer, Jody M. Wagner, Tuesday put on hold $767 million in such bonds, sales of which were scheduled to close on Thursday. “We spoke with the underwriters this morning, and they told us they couldn’t proceed with closing this deal,” Ms. Wagner said. The state had planned to use the bond money to revitalize the economy of its slumping tobacco-growing regions.

Also now in doubt: California’s plan to sell $2 billion of bonds backed by tobacco payments in mid-April to help finance its huge deficit. Similarly at risk is a plan in New York to float a hybrid $4.2 billion bond offering backed by personal-income tax revenues and tobacco money. Kansas had planned to float $175 million in capital-improvement bonds, funded partly by tobacco-settlement payments, which would have covered that state’s $105 million budget gap for the current fiscal year.

With the possibility of the Philip Morris money not arriving, several state attorneys general were preparing to enter the fray. Vermont’s Mr. Sorrell said the states would most likely file a formal motion to intervene in the Illinois case. That would allow the states to urge the court to impose a lower bond to protect their voters’ financial interests. (The states wouldn’t challenge the underlying verdict against Philip Morris.) Illinois law ordinarily requires a bond equal to the entire trial judgment — a mechanism to ensure that if the plaintiff wins on appeal, the full amount will be available.

The bond requirement stems from a $10.1 billion verdict late last month against Philip Morris in a suit over its low-tar cigarettes. In the first class-action alleging that such labels mislead smokers into thinking that those cigarettes are less harmful, Judge Nicholas Byron of the state court in Madison County, Ill., ordered the company to pay $7.1 billion in compensatory damages and an additional $3 billion in punitive damages. The judge tacked on $1.8 billion in fees for the plaintiffs’ lawyers.

To be sure, the same state officials who want Altria and its rival tobacco companies to survive continue to attack cigarette makers. Various states recently have taken legal action to enforce marketing restrictions that the settlements imposed on cigarette makers. New York, which is hoping to sell bonds based on tobacco-settlement payments to deal with its current budget woes, last week enacted one of the nation’s toughest laws restricting smoking in public places. R.J. Reynolds Tobacco Holdings Inc. and Loews Corp.’s Lorillard Tobacco unit Tuesday filed a lawsuit against California alleging that the state is improperly “vilifying” cigarette makers in the state’s antismoking ad campaign.

But there has been a broad alignment of economic interests between cigarette makers and the states. Considering both cigarette taxes and the settlements, “the states make more money from each pack of cigarettes sold than anyone else, and they have an enormous financial stake” in tobacco sales, said Tommy J. Payne, executive vice president of Reynolds, the nation’s No. 2 cigarette maker.

In the years since the settlements, legislators in 16 states, egged on by the attorneys general, have passed laws limiting the size of bonds that must be posted by corporate defendants seeking to appeal trial defeats. In four of the states — Louisiana, Nevada, Oklahoma and West Virginia — the laws only apply to cigarette companies that settled.

States have helped the big cigarette manufacturers in other ways as well. Twenty-two have passed laws that would essentially force small makers of bargain-basement cigarettes out of the market if they don’t make certain payments required by the major tobacco settlements or related legislation. These laws hinder deep discounters that have been eating into the larger cigarette makers’ profits. Propping up the bigger players makes economic sense to the states because their settlement payments rise and fall in line with cigarette sales by the big manufacturers.

Between November 1998, when the tobacco industry signed its main settlement with 46 states, and 2002, cigarette makers paid those states more than $21.6 billion. An additional $5 billion is scheduled to be paid this year.

States have increasingly come to rely on this money — as well as on rising cigarette-excise taxes — as they struggle to cope with their worst financial crisis in 20 years. “These dollars are becoming more and more important,” said Lee Dixon, who tracks health policy for the National Conference of State Legislatures.

In the 1990s, states became accustomed to plentiful tax revenue, in part because the rising stock market inflated taxes on capital gains and income. Governors and legislatures pushed through popular spending programs and cut unpopular levies.

Short-Term Solutions

Then, when the economy began to sour, many states chose short-term solutions, such as tapping the settlement payments and draining cash reserves, rather than realigning their budgets to reflect new economic realities. For the current fiscal year, which ends for most states on June 30, 21 of the 46 states that signed the main 1998 tobacco settlement agreement tapped that money to help close shortfalls. The previous year, 16 states relied on settlement money.

As of February, the collective deficit for the 50 states for fiscal year 2003 was $27 billion, according to data supplied by the National Conference of State Legislatures, which is based in Denver. Next year, the states are looking at even bigger deficits. Most states, unlike the federal government, are required by law to balance their books at the end of their one- or two-year budget cycles. This forces them to cut spending, raise taxes, or both.

That’s why state officials across the country are watching the situation in Illinois so closely. Philip Morris’s general counsel, Denise Keane, last week sent a letter to Ms. Gregoire, the Washington state attorney general, saying that the company was “not financially able to post the enormous bond that the Madison County court has demanded” and warning that “it is presently uncertain” whether Philip Morris would be able to make its $2.5 billion payment to the states.

Illinois Attorney General Lisa Madigan said she will take Philip Morris to court if it doesn’t make the payment.

Altria has long prided itself on its high credit rating, so it was particularly striking Monday when Moody’s Investors Service cut Altria’s rating by two notches, to just three levels above “junk.”

Illinois lawmakers are now considering legislation that would limit the amount of money Philip Morris must put up as a bond in order to appeal. Representatives of Philip Morris and the states’ outside trial lawyers met Tuesday in Chicago under the auspices of the speaker of the Illinois House of Representatives to try to cut a deal.

Philip Morris wants the cap set at $100 million. The trial lawyers were looking for a cap of between $500 million and $1 billion. State Rep. Robert S. Molaro, a Chicago Democrat, said Tuesday that once the parties agreed on a figure, lawmakers would move forward with a bill.

Public-health groups say they oppose any legislation that would protect Philip Morris. “We don’t think the Illinois legislature ought to pass a bill to help one company, especially a company that’s been found to have injured more than one million citizens of the state,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.

Mr. Myers said that Altria, which isn’t a defendant in the Illinois case and thus isn’t technically liable, could pay the bond for Philip Morris. Altria has an $8 billion credit line and pays about $5 billion in dividends each year. “Philip Morris wants the court to relieve it of any obligation to make any sacrifice,” Mr. Myers said.

Altria responded to this assertion by pointing to a filing it made last week with the Securities and Exchange Commission in which it said Philip Morris can’t post a $12 billion bond.

The Illinois share of the Philip Morris payment due April 15 is $150 million, according to former Illinois Gov. Jim Thompson, who is now lobbying for the company. Most of that money is earmarked for health-care programs for the elderly, Mr. Thompson said.

“We’re very concerned that the amount of the appeal bond will adversely affect budgets in 46 states,” said W.A. Drew Edmondson, attorney general of Oklahoma. There is “no benefit to public health by putting Philip Morris in the financial position” of having to declare bankruptcy, he added. “They’re going to sell just as many cigarettes even if they’re in receivership.”

Gregory Zuckerman, Christopher Lawton, Richard A. Bravo and Stan Rosenberg contributed to this article.

“Patriot” Act II Bush Administration Escalates Its War on Americans’ Freedom

by

By Jeff Milchen
First published by Pacific News Service
February 11, 2003

Last October, Senator Russell Feingold (the only Senator with the courage to oppose the “Patriot Act”) asked the Department of Justice to “describe what efforts are being made within the department to broaden the powers of the USA Patriot Act.” He never received a response, but now the American people have the answer.

A leaked copy of the Bush administration’s draft “Domestic Security Enhancement Act of 2003” (DSEA) indicates that even after the 2001 Patriot Act expanded federal police powers while curtailing privacy rights, the Bush administration thinks Americans are still too free and government too small. Like the Patriot Act, the massive “Security Act” draft contains a few measures that could help catch a terrorist, surrounded by many that merely propel us further toward a secretive police state.

For starters, the DSEA would revoke key elements of the Freedom of Information Act (FOIA), enacted to prevent government from keeping secrets from the public unless a legitimate security concern exists. Currently, FOIA gives us the right to know if a missing person is in the custody of any government agency. But under DSEA, anyone — even U.S. citizens — could be detained secretly in connection with any “terrorist” investigation, a term lacking legal definition.

Does abandoning this bedrock principle of freedom make us safer? Not likely. The Freedom of Information Act already allows the government to withhold such information if disclosure could hamper investigation of other suspects or events. Under the government veil of secrecy established last year, we have no legal right to know who among the 1,000 plus-people secretly detained by the Bush administration since Sept. 11 was charged with a terror-related crime.

Chemical and nuclear corporations may be among the few entities cheering the DSEA. The Act would grant a long-standing dream of chemical corporations: stripping citizens of our right to know about threats posed by toxic chemicals and the risks of spills or explosions in our communities. Like many Bush Administration proposals, this draft smells like a case of waiting for the right opportunity to provide cover for pre-existing agendas.

When asked about the document, a Department of Justice spokesperson claimed that it represented merely “staff discussions.” But the DSEA clearly is ready for introduction any time — perhaps while the public is distracted by an attack on Iraq.

The DSEA contains many proposals disturbing for immigrants, including increased punishments for violations of the Immigration and Nationality Act by aliens. But perhaps the most alarming proposal (Section 501) would give the Justice Dept. power to revoke a person’s permanent resident alien status or even U.S. citizenship for participating in, or “providing material support to … a terrorist organization.”

Since the 2001 “Patriot Act” redefined “terrorist activity” so broadly that minor vandalism could qualify, donating to a nonprofit organization that, unknown to you, is on Ashcroft’s hit list could end your life as an American citizen and resident.

Section 312 would revoke laws that prohibit police from spying on citizens without substantive evidence of criminal activity. This effectively reauthorizes the CIA and FBI to engage in domestic terrorism against activist groups — practices that became illegal after the well-documented COINTELPRO program abuses of the 1960s ruined the lives of many citizen activists.

Denver area activists don’t need to be warned. Last year, they learned that Denver police had created “spy files” on more than 3,000 activists and 200 civic organizations for their organizing activities or participation in rallies. The Nobel Peace Prize-winning Quaker group, the American Friends Service Committee, is among the groups labeled “criminal extremist” by Denver police.

This would be laughable if the news hadn’t prompted many calls to targeted groups by people asking to have their names removed from databases. Imagine the damage to human rights organizations so labeled at the national level.

These threats are just a few among dozens of concerning proposals within the DSEA. Thanks to a brave soul at the Justice Department who values freedom over obedience to his employer, we have a chance to examine this assault on civil liberties and debate it rationally before it is thrown upon us amid the fervor of attacking Iraq or terrorist threats.

Now is the time to recall the words of James Madison: “If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy.” People who value their freedom must fight the oppressive measures proposed in the draft “Security Enhancement Act.” Please visit ReclaimDemocracy.org for ideas on heading off this attack on our freedom.

Jeff Milchen directs ReclaimDemocracy.org

Orange Alert for Civil Liberties

by

Even after the draconian measures of the “Patriot Act,” George W. Bush and company apparently think Americans are too free and that we cannot be trusted to know what further infringements on our freedom are being planned.

The Justice Department’s plans for a “Domestic Security Enhancement Act of 2003” were revealed only through a Department insider leaking the document to the watchdog group Center for Public Integrity. Dick Cheney and House Speaker Dennis Hastert are the only recognizable elected or quasi-elected officials documented as having obtained the document, which is marked “Confidential: Not for Distribution Draft Jan. 9, 2003.”

Consequences of the proposals in the draft DSEA
 If introduced and passed as drafted, the Act would:

Revoke portions of the Freedom of Information Act. (See Section 201, pp. 13-14 of pdf) Your right to obtain information about a friend or family member detained by the government in connection with any activity deemed “terrorist” would be revoked. This is incredible in lieu of the fact that the Freedom of Information Act already allows for the government to withhold such information if its disclosure could hamper investigation of other suspects or events (exemptions 7a, 7c, 7f, in 5 U.S.C. 552b7).

The Act also would prevent you from having reasonable access to information about threats to your health and community, such as levels of toxic emissions (Section 202). The Act refers to such information as “a roadmap for terrorists.” The result: you’ll have to trust the Bush Environmental Protection Agency to disclose any corporate activities that pose a threat to you and your family.

Allow the Bush Administration to revoke your residency or U.S. citizenship. Perhaps the most alarming proposal (Section 501) would give the Justice Dept. power to revoke a person’s permanent resident alien status or even U.S. citizenship for participating in, or “providing material support to … a terrorist organization.”

Since the 2001 “Patriot Act” redefined terrorist activity so broadly that minor vandalism could qualify, donating to a nonprofit organization that, unknown to you, is on Ashcroft’s disfavored list could end your life as an American citizen and resident. Alarmist? Consider that members of the Bush Administration have publicly accused journalists who criticize them of being “terrorists” (e.g. Defense Policy Board Chairman Richard Perle on CNN, March 9, 2003).

Invalidate state legal consent decrees (Section 312) that seek to curb police spying on U.S. citizens, regardless of any tangible evidence of criminal activity. This effectively re-authorizes the CIA and FBI to engage in domestic terrorism against activist groups ( a la COINTELPRO); practices that were made illegal after the well-documented abuses of the 1960s.

If you think we overstate by using the term domestic terrorism to describe the FBI and CIA activities, please inform yourself about this critical history. The Church Committee report (officially the Final Report of the Select Committee to Study Governmental Operations with Respect to Intelligence Activities of the United States Senate, 94th Congress, 2nd Session, 1976) is a good starting point.

Allow the government to force U.S. citizens to allow invasive collection of DNA samples (Sections 301-306) if the Administration consider someone a “suspected terrorist.”

The Act also would authorize the Justice Department to conduct secret searches of the home of any suspected terrorist for 15 days after any “national emergency,” rather than after a formal declaration of war, as in current law. Wiretaps of U.S. citizens for longer periods and with less court oversight are another proposal. There are many more serious concerns than we cite here. The most thorough analysis of the proposal we’ve seen thus far are available from the ACLU.

We urge you to at least scan the “Security Enhancement Act,” especially if you think we exaggerate the threats to our freedom. Even a casual read should quickly dispel that idea. Then please join us in working to preserve our Constitutional rights.

“A time comes when silence is betrayal. Even when pressed by the demands of inner truth, men do not easily assume the task of opposing their government’s policy, especially in time of war…

We are called to speak for the weak, for the voiceless, for the victims of our nation, for those it calls “enemy,” for no document from human hands can make these humans any less our brother.”
— excerpted from A Time to Break the Silence, Martin Luther King’s speech in New York City, April 4, 1967

Action Suggestions

Join at least 51 communities that have passed resolutions supporting due process and civil liberties to make statement against government repression. Dozens more communities have initiated related efforts. See BORDC.org for a guide to organizing such campaigns.

You can call, fax, or write or visit your U.S. Representative and Senators to voice your opinion on the measures noted in the draft “Domestic Security Enhancement Act of 2003,” but be aware that no member of Congress except House Speaker Dennis Hastert had been sent this draft as of February 7. You can reach any congressional representatives toll-free at 1-800-839-5276 or (202) 224-3121 (Capital Switchboard), or look up their other contact information.

Only through raising public dialogue can we hope to thwart this massive expansion of government and corporate power at the expense of civil liberties. Your letters to the editor, calls to talk radio (especially conservative shows), and discussion with family and friends all are meaningful and necessary actions. We are happy to offer help with any letter-writing, and our summary provides excellent material to excerpt for adapting to your own voice (but please don’t use it verbatim–editors are wary of form letters).

You also can work to pass a local resolution in support of civil liberties and opposing the “Security Act” or other attacks on freedom, as 32 U.S. towns and cities have already done.

Clear Channel: the Media Mammoth that Stole the Airwaves

by

By Jeff Perlstein
First published in Media File, November 2002

Can you name a Texas-based multinational company that is facing a Department of Justice investigation, lawsuits for inappropriate business practices, a flurry of criticism in the mainstream press, and a bill in congress to curb its impact on the industry?

Did you say Enron? Try again.

This 800 lb. Texas gorilla has spent $30 billion since 1996 to become the world’s largest radio broadcaster, concert promoter, and billboard advertising firm. It’s a major player in American television and Spanish-language broadcasting.

Clear Channel Communications of San Antonio may not be a household name yet, but in less than six years it has rocketed to a place alongside NBC and Gannett as one of the largest media companies in the United States. The mega-company has gained a reputation for its ugly hardball tactics. Clear Channel has played a leading role in destroying media diversity in the United States. And yes, it is the same media company that allegedly “blacklisted” certain songs following September 11, including Cat Stevens’ Peace Train and John Lennon’s Imagine.

“It’s not just how big and powerful they are but how they do business, the arm twisting,” Mike Jacobs, former independent label owner and manager of Blink 182, told Eric Boehlert who has been covering Clear Channel’s shady business practices for Salon.com.

Media Mobster
Before passage of the 1996 Telecommunications Act, a company could not own more than 40 radio stations in the entire country. With the Act’s sweeping relaxation of ownership limits, Clear Channel now owns approximately 1225 radio stations in 300 cities and dominates the audience share in 100 of 112 major markets. Its closest competitors — CBS and ABC, media giants in their own right — own only one-fifth as many stations.

Accusations abound that Clear Channel illegally uses its dominance in radio to help secure control of the nation’s live entertainment business. Several cities, including Denver and Cincinnati, have charged radio station managers with threatening to withdraw certain music from rotation if the artists do not perform at a Clear Channel venue. This tactic, known as “negative synergy,” has allegedly been used to pressure record companies into buying radio-advertising spots in cities where they want to book concert venues.

With this anti-competitive tactic of leveraging airplay against concert performances, Clear Channel has firmly solidified its hold in both areas. As a result, Clear Channel now owns, operates, or exclusively books the vast majority of amphitheaters, arenas, and clubs in the country. It also controls the most powerful promoters, who last year sold 27 million concert tickets. That is 23 million more than the closest competitor.

While this may be good for Clear Channel owners and investors, a lot more is at stake here than the buying and selling of stocks.

“Profit maximization has never been the sole point of U.S. communications policy,” writes Douglas Gomery in a March 2002 white paper for the Economic Policy Institute.

“Under the Communications Act of 1934, the Federal Communications Commission (FCC) is charged with allocating spectrum space to maximize ‘the public interest’…and to encourage a diversity of voices so as to promote a vibrant democracy.”

Far from fostering a diversity of voices, Clear Channel’s monopolistic practices are accelerating the homogenization of our airwaves. The company syndicates both Rush Limbaugh and Dr. Laura to hundreds of stations nationwide, shuts out independent artists who can’t afford to go through high-priced middlemen, and is responsible for taking the practice of voice tracking to new heights (or depths, depending on your perspective).

Voice tracking is the practice of creating brief, computer-assisted voice segments that attempt to fool the listener into thinking that a program is locally produced, when in fact the same content is being broadcast to upwards of 75 stations nationwide from a central site. So you have one overworked ‘radio personality’ recording the phrases, “Hello Topeka!” “Hi Springfield!” “How you feeling Oakland?” all day long.

This consolidation is clearly counter to the Federal Communications Commission’s (FCC) mandate to encourage media diversity. Now, however, the long-standing concerns of media activists are being echoed by the mainstream press, the courts regulatory agencies, and even by members of Congress.

Mega-Monopoly
Clear Channel is currently facing antitrust lawsuits from plaintiffs around the country, ranging from an Illinois concert goer concerned with soaring ticket prices to the nation’s largest Latino-owned radio company.

Alleging monopolistic behavior, however, is not the same as convincing a judge to move towards a trial. But last summer a small Denver-area concert promoter, called Nobody in Particular Presents, sued the media behemoth for antitrust violations, claiming that it “has used its size and clout to coerce artists… to use Clear Channel to promote their concerts or else risk losing airplay.” The judge agreed to hear the case, and ruled that the evidence is “sufficient to make a case of monopolization and attempted monopolization under Section 2 of the Sherman Act.”

As a result, the halo of silence surrounding the company’s anti-competitive practices may finally be shattered. Plaintiff’s lawyers will be able to compel music industry insiders to testify regarding the often-repeated, off-the-record allegations that Clear Channel’s radio stations have illegally rewarded or punished artists based on their dealings with the company’s concert division.

“The political terrain is really shifting,” says Robert McChesney, author and professor of communications at the University of Illinois, Urbana-Champaign. “There’s an opportunity for discussion about radio that would have been unthinkable six months or a year ago,” he told Randy Dotinga in Wirednews.com.

Irregular Regulators
Despite a clear history of promoting consolidation, the Department of Justice and the FCC, the federal regulatory agencies charged with safeguarding the public interest in business and media respectively, are finally showing a spark of interest in holding Clear Channel accountable. While the Justice Department is spearheading its own “top secret” investigation of Clear Channel, the FCC has been mostly dragging its heels, with three notable exceptions:

After receiving numerous complaints from across the country, the FCC has announced it is investigating the claims by an advertiser in Chillicothe, Ohio, that Clear Channel is circumventing existing ownership limits by operating stations through shell companies in a practice known as “parking” or “warehousing” stations. Clear Channel has sold off stations to alleged front companies, which allow Clear Channel to continue operating the properties while also providing an easy way to buy back the stations, should the FCC slacken ownership limits in the future.

In Charlottesville, Virginia, the FCC has preliminarily denied a station transfer to Clear Channel and has scheduled a formal hearing to examine the situation. Big deal? Yes, because the FCC has not taken such an action since 1969 — which, more than anything else, speaks to the FCC’s lack of policy enforcement over the last thirty years and is one of the reasons why we have arrived at the current situation.

In Monterey, California the FCC has held up another Clear Channel transfer request at the urging of Congressman Sam Farr (D-Calif.).

Congress Catches on to “Shady Practices”
Fortunately, Farr is not alone in expressing concern over Clear Channel’s shady business practices. He is joined by a handful of other vocal members of Congress, including Senator Russ Feingold of Wisconsin, who has proposed a bill to deal with the issue. Known for his work on campaign finance reform, Feingold launched the Competition in Radio and Concert Industries Act last June, saying: “We need to repair the damage that has been done through this anti-competitive behavior…”

Without naming names, the Act takes direct aim at some of Clear Channel’s business practices, such as the warehousing of stations for future purchase, “negative synergy” with concert promotions, and pay-to-play schemes between station owners and record companies. Consumer groups, minority-owned radio companies, labor unions, and independent artists have all thrown their support behind the Feingold bill.

And not a moment too soon. The growing momentum to hold Clear Channel accountable for its excesses comes as the FCC — chaired by Michael Powell, son of Secretary of State Colin Powell — announced that it will review the last remaining protections on media diversity.

If Powell’s FCC follows his previous positions, this ruling could sweep away the very last remaining protections related to media ownership. Powell has publicly stated that he has “no idea what is meant by the public interest” and prefers to let the market resolve such thorny questions.

FCC’s Proposed Rules on Ownership
On September 12 the FCC announced a proposed Rulemaking on Ownership. Dubbed the Omnibus Ownership Ruling by consumer advocates, it could be the final nail in the coffin of media diversity and the public interest. Under Powell’s direction, and with a huge push from mega-media’s deep-pocketed lobbyists, the Omnibus Ruling lumps together a number of disparate proposals bound by the same core principle of eliminating the last public interest protections in media ownership.

Proposals include a call to end the ban on newspaper-TV cross-ownership in the same city, eliminate the rule limiting companies to eight radio stations in one listening area, and end the limit on national television broadcast ownership of 35% of the potential national audience.

The Omnibus Ruling has newspaper moguls salivating at the possibility of amplifying reach through radio and TV without seriously investing in increased or better reporting — they will broadcast their print stories. Radio giants are poised to swallow up the last remaining independent stations and smaller holdings. Cable companies and the networks are eager to merge so they can further downsize staff, increase audience, and maximize their already huge profits.

The Campaign
Clear Channel epitomizes the disastrous consequences of hyper-consolidation that resulted from the 1996 Telecom Act; a disaster that activists say would further accelerate if the FCC implements the Omnibus ruling. They also see the Ruling as an opportunity to spot light the need for democratizing the media.

The current rumblings in Washington, D.C. regarding Clear Channel are the direct result of many years of citizen agitation and organizing from the grassroots that continue to grow.

Unionists and their allies have rallied in Seattle, Cleveland, and other cities. Community coalitions that hold Clear Channel accountable for the negative effects of over consolidation have emerged in Detroit and San Francisco. Letter writing campaigns have urged elected officials to reign in the company and make policy changes to protect the public interest.

Several websites and hundreds of listserves have been providing information about Clear Channel’s excesses and communities’ resistance — most notably clearchannelsucks.org and stopclearchannel.com

What’s been sorely lacking is strategic coordination of these efforts to amplify their impact and link up with broader media-policy initiatives. A dynamic national coalition launched just such a campaign at the recent Reclaim the Media Conference, in Seattle during the weekend of September 12-15, 2002. Nationally recognized organizations such as FAIR, the Democratic Media Legal Project, Media Alliance, and Prometheus Radio Project began mapping out steps to mobilize public pressure around Clear Channel, the Feingold bill, the Omnibus Ruling, and beyond.

Jeff Perlstein is the executive director of Media Alliance.

If this topic interests you, you may also want to read :
Book Chains Versus The First Amendment

In U.S. First, Local Government Refuses to Recognize Corporate Claims to Civil Rights

by

News from the Community Environmental Legal Defense Fund
December 13, 2002

The elected municipal officials of Porter Township, Clarion County – a municipality of 1,500 residents an hour north of Pittsburgh in Northwestern Pennsylvania – became the first local government in the United States to eliminate corporate claims to civil and constitutional privileges. The Township adopted a binding law declaring that corporations operating in the Township may not wield legal privileges – historically used by corporations to override democratic decisionmaking – to stop the Township from passing laws which protect residents from toxic sewage sludge.

The actions by Porter Township, taken December 9, 2002, repudiate the history of state and federal public officials restricting the rights of citizens while expanding the rights of corporations and their owners.

Background
Along with close to a dozen other municipal governments in Pennsylvania, Porter Township officials had previously adopted a local law governing the land application of sewage sludge in the Township. The adoption of that municipal law was an outgrowth of the work done by residents and municipal officials to stop sewage sludge corporations from dumping Pittsburgh-generated sludge in the Township. To that immediate end, the municipal government adopted a “tipping fee” law that requires corporate sludge haulers to pay a per ton fee to the Township to enable the municipality to verify the safety of each load of sludge applied to land.(see endnote)

Sludge corporations have responded both legislatively and judicially to the adoption of those laws by Pennsylvania municipalities – which prevent corporations from turning to state and federal officials to override local self-governance.

Judicial Response
In 2000, Synagro Corporation — one of the largest sludge hauling corporations in the United States — sued Township officials in Centre County, Pennsylvania in an attempt to overturn the “tipping fee” law adopted by that Township. In their Complaint, the Corporation alleged that the law violated a litany of civil and constitutional rights asserted by the corporation. A ruling by the federal court is expected by 2004.

Legislative Response
 Legislatively, sludge corporations drafted and vigorously pushed bills that would strip Pennsylvania municipalities of their authority to make rules that would control the land application of sewage sludge and factory farms. A unique coalition of groups that included municipal governments, the Pennsylvania Farmers Union, the Pennsylvania Association for Sustainable Agriculture, the Sierra Club, the AFL-CIO, the United Mine Workers of America, Common Cause and others, defeated that legislation at the end of the 2002 legislative session.

In addition to the legislative and judicial responses to the assertion of local democracy by communities, sludge corporations have also instructed the state environmental regulatory agency and corporate farm lobbies to intervene with Clarion County Townships. In late 2002, the Pennsylvania Department of Environmental Protection and the Pennsylvania Farm Bureau met with Clarion County Townships to convince them to repeal their local laws. The four Clarion County Townships that have adopted the law refused. Instead, Porter Township forged ahead with adopting the most recent law, which eliminates corporate interference in the democratic processes of the Township.

Also in late 2002, the Alcosan Corporation, a sludge hauling corporation in Pennsylvania, threatened to use Pennsylvania courts to overturn the sludge law passed by the Township. Porter Township Supervisors, upon learning of the ability of corporations to direct the courts to vindicate corporate claims to civil and legal privileges to override local governments, decided to pass a law to eliminate corporate claims to those rights.

The actions of Porter Township — along with the actions of other municipal governments in Pennsylvania dealing with land applied sewage sludge and factory farms — evidence a shift of communities away from permitting corporate harms to asserting direct control over corporations.

The Sludge and Corporate Personhood Ordinances were developed by the Community Environmental Legal Defense Fund in partnership with the Program on Corporations, Law, and Democracy (POCLAD) and communities across Pennsylvania impacted by land applied sewage sludge and corporate factory farms.

Notes
Currently, the state Department of Environmental Protection only requires sewage treatment plants to test their sludge quarterly for health and safety purposes, and over a dozen Township governments in three Pennsylvania Counties have decided that such testing is inadequate to ensure the health, safety, and welfare of Township residents. The “tipping fee,” charged to the sludge corporation, provides monies to the municipality for the hiring of a testing laboratory, and for sampling each load of sludge for testing purposes. Corporate haulers are prohibited from applying sludge before the test results are returned to the Township government.

For more articles and campaigns on revoking illegitimate corporate power, see our “Corporate Personhood” page.

Debacle: Without Vision, A Senate Majority Perishes

by

By Harold Meyerson
First published by The American Prospect
November 6, 2002

They had no message. They were an opposition party that drew no lines of opposition. They had nothing to say. And on Tuesday, their base responded by staying home in droves.

The Democrats lost the Senate, lost seats in the House, and picked up significantly fewer statehouses than they had counted upon.

On what should have been the Democrats’ defining issues, they endeavored to be indistinct. They could never bring themselves to oppose Bush’s tax cut, his trillion-dollar handout to the rich, though that made it impossible for them to advocate any significant programs of their own. Nor could they bring themselves to oppose the White House’s headlong charge into Iraq, though polling showed over two-thirds of the American people oppose a unilateral war. So Missouri’s Jean Carnahan, Colorado’s Tom Strickland, New Hampshire’s Jeanne Shaheen and Georgia’s Max Cleland — Democratic Senate candidates in close races — backed the president. All of them lost.

The candidates were merely following their leaders. Senate Majority (now Minority) leader Tom Daschle condemned the tax cut but did not call for its repeal. House Democratic leader Dick Gephardt supported the president’s Iraqi adventurism and pushed it through the House at the earliest possible moment, so the Democrats could refocus the nation’s attention on their domestic message. Which, unfortunately, did not exist.

This past Sunday, The New York Times published a poll in which voters were asked whether the two parties had a clear plan for the country if they gained control of Congress. By a 42 percent to 39 percent margin, voters said the Republicans did. By a 49 percent to 31 percent margin, voters said the Democrats did not.

On election night, the AFL-CIO conducted a poll of 1020 union members, 68 percent of whom said they had voted for a Democratic House candidate. The members were asked whether they thought the Democrats had clear plans for strengthening the economy and creating jobs. Forty percent of this heavily Democratic working-class group said yes. Forty-seven percent said no.

They were right: In a nation where economic anxiety is high and rising, the Democrats had no economic plan. On corporate reform, they did nothing more than pass a bipartisan bill instituting some accounting reforms, but they squelched stronger legislation that would really have cracked down on corporate abuse — and which Republicans would have opposed. That was Daschle’s doing; he was afraid of alienating the Silicon Valley CEOs who wanted to preserve their stock options. Now, with wall-to-wall Republican control, the CEOs will preserve their stock options. The Democrats also promoted bankruptcy legislation that would have ruined working-class creditors. That was Daschle’s doing, too; he was afraid of alienating big banks. Now, with Republican control, the big banks will be able to run amok.

So Tuesday was a great day for the business interests with whom the Democrats sought to curry favor. Actual existing Democratic voters, on the other hand, couldn’t figure out what their party stood for. The Republicans knew very well what their party stood for; the president spent the final two weeks dashing from state to state promoting a message — get tough on Saddam, get tough on liberals — that roused the GOP base. The Democratic base remained unroused. An election eve Gallup Poll found 64 percent of Republicans saying they were especially motivated to vote; just 51 percent of Democrats said the same.

The base stayed home. In Georgia, where Zell Miller, the Democrats’ most rightwing, Bushophilic Senator, counseled his fellow Georgia Democrats to run to the right lest the good-ol’-boy vote turn, the good-ol’-boy vote turned anyway, while African-American Atlanta didn’t come to the polls, dooming not only Cleland but heavily favored Democratic Governor Roy Barnes. In Maryland, working-class Baltimore voted light, and longtime favorite Democratic gubernatorial candidate Kathleen Kennedy Townsend went down to defeat. In state after state, the Democrats waged a futile campaign to win over their periphery, while failing to mobilize their core. And midterm elections, as they bewilderingly forgot, are all about mobilizing your core.

If the Democrats had a paradigmatic candidate in this debacle year, it was the guy they recruited to go up against Jeb Bush, super-attorney Bill McBride. Early on, it had looked like the Democratic candidate was going to be Janet Reno, Bill Clinton’s controversial attorney general, who seemed to have no chance whatever to win. The state’s teachers unions then recruited McBride into the race. A fabulously successful lawyer with an affable demeanor, McBride had neither held nor run for office previously; he had taken no positions that could damage him with voters. Nor did he take any in the course of the campaign. After narrowly defeating Reno in the primary, he went up against the governor by criticizing Jeb’s record on education. He offered no detailed education plan of his own, however, and declined to take positions on anything else. He needed to mobilize the state’s African-American, Haitian and non-Cuban Latino constituencies, yet he had nothing to say on economic-security or other issues that concerned them. McBride was simply the anti-Jeb, and on Tuesday, that wasn’t enough of an identity to pull much of the Democratic base. He lost to Bush by 13 points.

Or perhaps the Democrats’ paradigmatic candidate was Texas’ great Latino hope, gubernatorial candidate Tony Sanchez, an oil and banking gazillionaire who dropped about $60 million of his own money into his campaign, and who also failed to craft a message of his own. Like McBride, Sanchez assailed his opponent, Republican Governor Rick Perry, for the state of the schools, and also for being beholden to the state’s imploding insurance industry. He had nothing to say, however, to the hundreds of thousands of dirt-poor Latinos, who would have gained greatly from a living-wage law that the legislature had passed but that Perry had vetoed; the issue was not on Sanchez’s radar screen. Nor was he on Texas’; Latino turnout fell understandably short of the Democrats’ projections and the Republicans won both the gubernatorial and senatorial contests in Texas going away.

Or maybe the paradigmatic Democratic candidate was California’s own Gray Davis, who eked out a scant five-point victory over Republican Bill Simon, a candidate of industrial-strength ineptitude. Davis took office in 1998 with a stunning 20-point victory, but he spent the first three-and-a-half years of his term estranging the Democratic base by vetoing countless pieces of progressive legislation, and estranging almost the entire state by his relentless focus on fundraising. In the past couple of months, he was compelled to shore up his base by signing some groundbreaking liberal bills, but it was barely enough to pull him through. For the most part, though, Davis spent his $60 million campaign boodle on relentless attack ads against Simon, driving a disproportionate number of late-deciding voters to the Green Party’s candidate.

California is so Democratic that not even Davis could lose it. The Democrats ended up sweeping all eight statewide offices, though the turnout of the base was so depressed that some of statewide contests that should have been won handily were turned into squeakers. (Of the four incumbent Democrats running statewide, Davis had the smallest margin of victory.)

From one end of the country to the other, the Democrats had nothing to say. And the nation will suffer for their silence.

It will suffer in all the rightwing judicial appointments that will be ratified, for the Supreme Court on down, now that the Republicans control the Senate. It will suffer in the lack of scrutiny that the administration will receive now that the Democrats control no committees. Only the filibuster now stands between the nation and the unchecked rule of the most rightwing, xenophobic and belligerent administration in the nation’s history.

The first order of business for Democrats is clear: They must dump the utterly discredited masterminds of their disaster. Dick Gephardt, Tom Daschle, and Democratic National Committee Chairman Terry McAuliffe, a let’s-make-a-deal businessman and fundraiser of no discernible strategic savvy, went up against a popular president by crafting an indistinct message for undefined candidates. Labor leaders from AFL-CIO President John Sweeney on down should throw their considerable weight behind the efforts to drive these money changers from the party’s inner sanctum.

Were there extenuating circumstances that account for the Dems’ defeat? There are always extenuating circumstances. Corporate money poured in at the end to pay for commercials that vilified the Democrats; the drug companies alone spent enough money to cure cancer had the thought occurred to them. But the Democrats had a record level of money, too. Their problem was less the quantitative imbalance of the commercials than the qualitative one: The Republicans had a coherent theme (backing the president); the Dems didn’t.

The second order of business for the Democrats, then, is message. In a nation where economic insecurity is routine; where anxiety over jobs, retirement and health coverage is widespread; the failure of the Democrats to connect on any of these causes is astonishing. Unions can help Democrats to make those connections: Among union members, according to the AFL-CIO poll, awareness of the two parties’ differences on economic issues is such that 62 percent of white men and 65 percent of gun owners voted Democratic on Tuesday. But only 13 percent of the U.S. work force is unionized; for the rest of America, the party must look to itself to draw distinctions. It must now craft plausible policies that will restore some security to the economic lives of Americans — and that cannot be done without challenging the all-wealth-to-the-wealthy economics of the administration. The party must also move to restore some security to the social lives of Americans; in particular, to defend abortion rights now that administration may soon be able to nominate potential justices who’d create an anti-choice majority on the Supreme Court.

The Democratic Leadership Council and other center-right Democrats will doubtlessly argue that this election proves that Democrats dare not deviate from fiscal conservatism at home and hawkishness abroad. But the dwindling of the Democratic base this Tuesday argues precisely the opposite: that when Democratic candidates cease to be Democrats, Democratic voters cease to be voters. Republicans may have worked to depress Democratic turnout in this week’s election, but the real scandal is, so did the Democrats.

Harold Meyerson is editor-at-large of the Prospect.
©The American Prospect