February 2008 capitol observations

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***The Presidential Sweep Stakes

The America People Are Shaking Up The Political Parties
After the votes in Iowa, New Hampshire, Nevada, and South Carolina, it doesn’t take a public opinion poll to tell us that the American people are pretty well fed up with the political system in this country. Neither do we need a pollster to tell us folks are upset with most of the national politicians. The buzz-word in the early voting states quickly became “change.” Plainly put, folks just don’t trust most politicians on the national level – with justification in many cases – and are demanding drastic changes in the way the federal government operates. Most American citizens feel left out of the system and during the primary season they are letting their feelings be known. The recent votes are the best evidence of the strong desire for change and that a strong connection to the status quo and especially to the Bush regime simply won’t sell in this unstable climate.
At year’s end, a Wall Street Journal/NBC News poll should have alerted us to what was going on amongst the people across the country. The poll revealed that 46% of the people want major reforms and a brand new and different approach to governing. The mood was said to support more than small incremental changes, and all of the early votes confirm it. Most folks believe that government responds to the rich, powerful, and well-connected and that all of the rest of the citizens are left out. It’s also quite apparent that the American people at year’s end didn’t want what would amount to be a “Bush Third Term” and that feeling seems to have intensified.
The mood of the people certainly appears to be for major changes. Interestingly, three in 10 respondents in the poll conducted for WSJ/NBC say the two-party system is "seriously broken” and that the country is in need of a third political party. That finding by the pollster was most significant, in my opinion. The following are some of the significant findings from the poll, which was done in late December:

  • Folks don’t really trust the Bush Administration and blame those in charge for most of the nation’s economic problems.

  • A majority of the American people disapprove of the performance of members of Congress.

  • The country wants our troops out of Iraq.

  • The people want real leadership when it comes to picking a successor to President Bush.

  • Democrats display more zeal for their presidential choices.

  • Americans of all ages and regions list gasoline prices as the economic woe most affecting them, followed by health costs and retirement savings.

  • The subprime lending problems are on the minds of folks all across the land.

When you consider that we have had seven very bad years under a Republican Administration that doesn’t seem to have any concern for the real problems facing most American citizens, the mood for change should favor the Democratic Party. But, it must be remembered that the national Democrats have dropped the ball so badly in the last two presidential elections that I wouldn’t rule out another mess-up this time around. I hope the trend of losing races that should have been won will be reversed this year.

Source: Wall Street Journal

Election Year Issues Are Beginning To Come In Focus
Now that we have some early votes behind us, I will attempt to take a little closer look at the specific issues that are being debated by the candidates from both parties who want to live at 1600 Pennsylvania Avenue next year. It was pretty clear at the end of the year that the economy and pocketbook issues had pushed ahead of the war in Iraq as the main issue. Clearly, that was a most significant change. Most recent polling and also exit-polling during the primary and caucus voting have shown that the economy is the major concern amongst most folks. More than half the voters in an ongoing survey for The Associated Press and Yahoo News revealed that the economy, as well as healthcare issues are extremely important to them personally. Folks are greatly concerned over their individual plights and with good reason, and the early votes confirm it. The following are some of their concerns:

  • Folks have a fear that they will face unexpected medical expenses.

  • Many who don’t have health insurance see little hope of getting help.

  • They worry that their homes will lose value.

  • Many worry that they will actually lose their homes.

  • There is a fear their mortgage and credit card payments will literally overwhelm them.

  • Many are concerned they won’t be able to pay for gasoline for their vehicles.

  • Terrorism and national security are still very important.

  • Now the reality of a looming recession has everybody greatly concerned.

Certainly, as we move into February, all of these issues still rank highly with the public and will be on the minds of folks when they go to the polls this year. The sinking economy, with a likely recession, and healthcare issues were extremely important to respondents in the poll and that now has become quite evident in early voting. Since we now appear to be heading into a major recession, that can’t be good news for anybody who is currently in office and who wants to be president. Unless things change quickly, any candidate lined up with the Bush Administration will be in big-time political trouble.

When you consider the tremendous cost of the 5-year war in Iraq, both in lives lost and financial costs, the results of this poll were even more telling. Financial worries have clearly risen in prominence. These new public concerns were reflected on the campaign trail in all of the early primary states. Candidates are now hitting hard on domestic issues and especially the economy. It’s obvious that Democrats have an advantage over Republicans when it comes to connecting with their core voters, and while that should pay off in November only time will tell if the Democrats blow another one.
Source: Associated Press

The Edwards Message Will Continue To Be Heard
Regardless of how my good friend John Edwards finishes in his run for the White House, he has made a mark on the campaign that is extremely important. The votes in Iowa, New Hampshire, and Nevada weren’t exactly what those of us who believe strongly in John’s candidacy had expected. This issue went to the printer before the Democratic primary vote in South Carolina. So that outcome wasn’t known when I wrote this piece. But, one thing that has come out of the political debate thus far has been John’s message about “corporate greed.” That theme, combined with his discussion of the influence of the powerful lobbyists in Washington, sent a very strong message. Unfortunately, those who own the media outlets froze John out very early in an effort to keep his voice in check. But, his powerful message was heard by the other candidates and that’s undisputed. There are many specific examples of corporate greed and how it works. The no-bid contracts received by Houston-based Halliburton for work in Iraq and the record profits earned last year by ExxonMobil, the world's largest oil company, were cited by John as prime examples of corporate greed combined with political influence in high places. I agree with John’s conclusion that corporate greed is killing the future for children of ordinary folks in our country.
John was the first Democratic candidate willing to take on the corporate culture that fosters greed and corruption. Now it appears that Senators Obama and Clinton and, even at least one Republican. Mike Huckabee, who is now finding out what John learned the hard way, shows some promise on those issues. John tried hard to convince voters that standing up to the powerful interests in Washington, which run the government for the “glorification of corporate profits” is critically important. But, the “rock-star” quality of Senator Obama and the organization skills of the Clintons took center stage in the early voting. As stated above, the national media virtually ignored the Edwards campaign from the beginning, and that hurt John’s chances. The Obama campaign has done a masterful job of making the Illinois Senator “the candidate of change” in this election year. Senator Clinton too has worked hard to keep pace on the “change issue,” and to shuck her “status quo” image.
Sadly, standing up to these entrenched moneyed interests that have an iron-fisted grip on government in our country doesn’t always result in a winning campaign. I hope that won’t wind up being the case this year. Although John Edwards hasn’t won a race yet, and may never do so, his message won’t go away. Regardless of whether John winds up as the Democratic nominee, he started a political debate that will continue past this primary season. In my opinion, this man should be commended for taking a stand!
Source: Bloomberg

Legislative Bodies Around The Country Will Be Busy This Year
There are a great number of issues that will be dealt with by state legislatures around the country this year. These issues will cover a number of critical matters, ranging from budgetary problems to immigration issues. State legislators will also be called on to fix everything that went wrong in 2007. That covers lots of issues. For example, there are all sorts of infrastructure issues that must be faced; homeowners, who have been victimized by risky fixed-rate mortgages and outright fraud, must be protected; health care issues are critically important matters to be dealt with; insurance issues of all sorts will have to get immediate attention; and water policy will be getting a widespread reassessment, since the severe drought in our region of this country has really brought these issues to the front burner. There are also a number of perennial hot-button issues, including the death penalty, will have to be dealt with. It appears that immigration may be the hottest of all hot buttons issues this year, which is somewhat of a surprise. Everybody seems to want to get in the act on immigration.
To put things in perspective, there are 44 state legislatures that have regular sessions this year, and they will have lots to do. Interestingly, more than three quarters of all legislative seats in the U.S. will be up for election in November. Fortunately for our legislators, Alabama won’t be one of the states holding legislative races this year. In the states that will have legislative seats up, however, voters will have an excellent opportunity to judge lawmakers on what they have accomplished. Although Alabama voters will have to wait until 2010, I suspect many will be keeping some good notes for later use. Let’s take a look at some of the issues that will be debated in legislative halls around the country this year:

  • Budget Problems: Almost every state, including Alabama, will have severe difficulties in funding state budgets. If the nation’s economy takes a nosedive – as predicted – budgets that depend on sales taxes will suffer.

  • Illegal Immigration: Without a doubt, legislators will debate the immigration issue in virtually every state. In my opinion, this is more political in nature than most of the issues to be debated. Everybody wants to get on the immigration bandwagon. I have to wonder why it took some so long to recognize this as a big problem.

  • Infrastructure Repair: The I-35W bridge collapse in Minneapolis last summer prompted a reassessment of infrastructure across the country. Roads and bridges in disrepair are located in almost every state. It will take billions of dollars to fix the problem. Policy makers must direct substantial revenue to repair and maintain infrastructure. Folks are mad about high gas prices nationwide and that makes an increase in the gas taxes – the source of funding – almost impossible. As a result, legislators must look elsewhere for the needed funds. In addition to the safety risks exposed by the Minneapolis bridge collapse, the rapid rise in construction costs will also loom over each of these discussions. States will likely have to borrow money to build now, before construction prices go even higher.

  • Mortgage Foreclosures: In response to the national foreclosure epidemic, legislatures in many states are considering overhauls of the lending industry. The next generation of homebuyers must be protected. But, lending reform generally won't help the hundreds of thousands of homeowners who already have adjustable-rate mortgages and whose interest rates are scheduled to skyrocket. Some states and the federal government are trying to help homeowners in adjustable-rate mortgages avoid ever paying the exorbitant interest payments. Lending reform and refinancing are just two pieces of the response to what has quickly become one of the hottest topics in state government. States also are looking at cracking down on appraisal fraud, overhauling the foreclosure process, and assisting communities to reduce unoccupied homes. The foreclosure crisis is a most serious problem and must be addressed. The lack of strong consumer protection laws in many states helped give rise to this problem.

  • Water Policy: Southeastern states are reassessing anything and everything related to water policy. The lack of rainfall has hurt farmers and created fears of water shortages — fears that, in some states, already have been realized. The drought comes in a region unaccustomed to water woes. Growth is tied directly to our water-supply problems. Alabama is formulating a water management plan, which is long overdue.

  • Hospitals and Health: It has been reported that bacterial infections kill close to 19,000 Americans a year, which is a much higher number than previously thought. The problem of drug-resistant infections and the danger of hospitals (where most cases develop) as breeding grounds for these infections have created a need for immediate action. In the past few years, about 20 states have enacted laws that require public reporting of hospital-acquired infections. All states will have to face up to this issue in 2008.

  • Other Health-Related issues: Legislators will also discuss a number of other health-related issues, from controlling Medicaid costs to expanding access to care. This could be a landmark year for universal coverage proposals, with several states, including New York, Colorado, Wisconsin, New Mexico, and California, considering proposals to bring health care to all. My state of Alabama has a tremendous short fall in its Medicaid program.

  • Insurance: States will be dealing with all sorts of insurance issues, including problems relating to healthcare policies, this year. Coastal states will have to deal with special issues relating to homeowner policy matters. Upgrading insurance regulation at the state level will be considered in a number of states.

  • Gambling Expansion: After a four-year reprieve from widespread shortfalls, unhappy days are here again for state budgets. This year, policy makers will likely be forced to decide between two distasteful options: to raise taxes or cut spending. Some states are looking at another revenue source to avoid this dilemma and that’s gambling.

  • Death Penalty: By agreeing to hear a case on lethal injection, the U.S. Supreme Court has created a de facto nationwide death penalty moratorium and turned the debate from abolition to administration. Once the Court rules, at least by the end of June, a flurry of legislative activity is likely, as states try to conform to the Court’s edict.

  • Campaign Finance Reform: Every state should pass meaningful reform this year, and some states appear to be serious about getting something done. Hopefully, my State of Alabama will be one of them.

It will be interesting at year’s end to review all that has been accomplished in all of the states. The challenges are great and it will take a bipartisan effort to meet them successfully. The power and influence of special interest lobbyists will have to be overcome. I hope we will be able to report that 2008 was a good and productive year for legislative bodies.

Source: Governing.com

Another Editorial Relating To The Badly Needed Jack Cline Act
In the last issue, I wrote about the Jack Cline legislation that the Alabama Legislature should pass during the regular session. There has been a great deal written on editorial pages over the past several weeks concerning the need to right a grievous wrong when it comes to the issue that gave rise to this legislation. A recent editorial in the Birmingham News that appeared on January 4th is certainly worth reading. It’s one of the best assessments of the issue that I have seen so far. Hopefully, all of our legislators read it!

Legislators Should Pass Strong Campaign Finance Reform Legislation
While there has been lots of talk about the need for campaign finance reform, thus far it’s just that – talk. The bills that are being introduced thus far appear to be good ones but they really don’t go far enough to solve the real problem. Unless the Legislature faces up to the real issue, and that is special interest money, the problems affecting Alabama’s political system won’t be solved. I recommend adding the following items to any package of campaign finance reform bills that may be introduced during the session:

  • Legislation to restrict the total amount of campaign money in statewide elections that can be given by an individual, corporation, or other entity to $5,000 to a candidate.

  • Restrict the total amount of campaign donations that can be given by an individual, corporation or other entity to legislative candidates to $1,000.

  • Restrict the amount that a candidate, or his or her campaign committee, can spend for statewide and local races (including races for the Legislature) to a reasonable amount. I would recommend $2 million for a governor’s race and lesser amounts for other offices as a start and $200,000 for legislative races.

  • Place a total ban on Pac-to-Pac transfers.

  • Put a total ban of all contributions from political action committees to candidates in judicial races.

  • Place a ban of spending of funds by groups such as the American Taxpayers Alliance for political purposes.

Without a doubt, the Legislature should act promptly on campaign finance reform legislation. The people of Alabama – in my opinion – expect more than just press releases and political posturing. As the song says, folks expect more action and less talking. If people are to have a real say-so in how the affairs of government are carried out, the flow of money in political campaigns must be controlled. The obscene amounts of money being spent in political races are the root cause of most of the problems that face Alabama citizens. In fact, I would go further and say that’s the case in most states and on the federal level.

Source: Associated Press
The Supreme Court Race Loses A Very Good Candidate
State Finance Director Jim Main announced recently that he won’t be a candidate for the Alabama Supreme Court seat being vacated by Harold See. Jim had planned to run for the court, but his duties as Finance Director will apparently keep him off the ballot this year. It’s being reported that the state's education and operating budgets will face serious fiscal hurdles in the coming year. Finding solutions to these financial challenges will be extremely difficult. In a statement released to the media, Jim explained:
Because of these financial factors, I have decided I can best serve my state and my governor by focusing my efforts on our complicated budgets, not campaign ballots. Therefore, I will not be a candidate for associate justice of the Alabama Supreme Court in the upcoming elections.
As we all know, Jim is Governor Bob Riley's top budget adviser. In fact, many observers believe Jim has been the best Finance Director in recent memory. In any event, Jim’s decision not to run came as a real disappointment to lots of folks. He had garnered a great deal of early support to run a very strong race. Jim would have been a very good member of the High Court. Some political experts say Jim may have been perceived as being “too fair” to suit some groups in Alabama. I hope that wasn’t a factor in keeping a good candidate off the ballot. In any event, the people of Alabama lost a very good candidate for the Supreme Court.
Source: Birmingham News

Selling Tort Reform Like Soap Has Been Successful
The tort reformers in Corporate America have done a great marketing job in over the past 25 years of selling a myth relating to our court system. Their goal was to destroy the civil justice system or weaken it to the extent that it becomes ineffective in order to protect corporate wrongdoers. I must say they have been totally dedicated to the task. The myth was sold like soap. It has been marketed in its slickest form. Lawyers who represent victims have found ourselves having to defend against such labels as “tort reform,” “jackpot justice,” “frivolous lawsuit,” “tort hell,” “greedy trial lawyers,” and “activist judges.” The public has been hearing this sort of thing for years without really understanding what was going on. For example, the term “tort reform” suggests that there is something that needs reforming.
Those of us who represent victims fell into the trap of defending a system that wasn’t really broken. In doing so, we actually helped the bad guys get their message out. The concept that the system had to be broken – otherwise it wouldn’t need to be reformed – was developed by the infamous Karl Rove. I must admit it proved to be most effective. Nobody really ever checked to find out the real truth about the jury system. Had they done so – it would have been clear that the system has worked extremely well.
The American people have been subjected to a constant barrage of information that painted a false picture of a judicial system that was out-of-control. Tremendous sums of money were spent by the tort reform groups, which carried out carefully orchestrated media and grassroots campaigns. Fake grassroots groups were formed in states with names like “Citizens Against Lawsuit Abuse” and were heavily funded in a highly secret fashion. They emphasized electing appellate judges who would protect corporate wrongdoers and ignore legitimate claims by victims. The well-planned, highly-organized and well-financed campaign, which was national in scope and designed to protect corporate wrongdoers, has been most effective.
In recent years, an annual report has been released to the media at year-end that graded the states on how well they have responded to the 15-year tort reform campaign purporting to rank states on how well or poorly the court systems in the states functioned. These reports were carried in state newspapers and reported by media outlets as being the “gospel truth.” This was part of the Rove plan and it has worked. States were labeled as judicial hell-holes and nobody ever really asked – why? Hopefully, things have begun to change and the tort-reformers are being exposed as nothing more than paid protectors of corporate wrongdoers.

Another Voice In The Preemption Battle
The Bush Administration hasn’t slowed down on their push to protect corporate wrongdoers and punish their victims. The plan to have federal preemption shut the courthouse doors in the state court systems is nothing more than a payback to Corporate America. Significantly, the preemption battle has attracted a number of participants. There are some extremely powerful and politically-influential corporations that are demanding payback from our president during the last year of his tenure in office. But, there are many knowledgeable folks who are strongly in opposition. A recent article in the New England Journal of Medicine, written by three doctors, is well worth reading on the subject of preemption. This article explains their perspective on the preemption issue very well and points out why the courts shouldn’t allow it.
If the Bush Administration is successful and persons with legitimate claims involving products and medical devices are denied access to justice, it will be one of the worst things to have happened to the American people in years. I hope people are beginning to understand how serious the preemption issue is and how it affects all American citizens. If you don’t have access to the New England Journal of Medicine article, let me know and we will send you a copy.
Source: New England Journal of Medicine

Supreme Court Limits Investors' Securities Lawsuits
The U.S. Supreme Court has literally pulled the plug on investors trying to sue suppliers of a company whose stock price was inflated with the aid of the suppliers. Corporate America had worked hard in an effort to get this ruling by the High Court. The court held that the investors didn’t have the private right to sue because they didn’t rely upon the statements or representations made by the suppliers. The investors had sought to impose liability on two entities, which, acting both as customers and suppliers, agreed to arrangements that allowed the investors' company to mislead its auditor and issue a misleading financial statement affecting its stock price. But the Supreme Court concluded that "the implied right of action does not reach the customer/supplier companies because the investors did not rely upon their statements or representations." With all due respect to the justices, that’s sort of hard to understand.
In the case, investors accused two suppliers and customers of cable television company, Charter Communications, of allowing Charter to mislead its auditor and issue a misleading financial statement that inflated its revenue by $17 million thereby affecting the company's stock price. The deal involved Charter overpaying for supplies it purchased in 2000, with the understanding that the suppliers would return the overpayment by purchasing advertising from Charter. The communications giant was able to post the advertising as revenue and then claim it met revenue projections for the year. While the suppliers had no role in actually preparing the financial statements, it sure looks to me like they had a real involvement in what was prepared to go to investors. The decision, written by Justice Anthony Kennedy, said that it’s up to Congress and not the courts to decide whether to extend the reach of a securities cause of action in such circumstances.
The ruling came in a suit filed by Stoneridge Investment Partners against Motorola Inc. and Scientific-Atlanta Inc., suppliers to Charter. Lower courts had rejected Stoneridge's claims, and in a 5-3 vote the Supreme Court has now rejected them. The U.S. Chamber of Commerce backed the defendants in the case as did others in Corporate America who want to restrict the rights of victims of corporate abuse and wrongdoing.
The decision will most likely affect the fate of a similar shareholder class action lawsuit involving Enron Corp. Lawyers representing investors in that case had asked the High Court to clarify its opinion, but I understand that request was denied. It will be interesting to see how Congress deals with this issue now that it has been tossed to its members by the Supreme Court.
Source: Insurance Journal

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