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Fighting the Hostile Takeover
Published on Monday, May 1, 2006 by the San Francisco Chronicle
Fighting the Hostile Takeover
by David Sirota
 

Amid all the consultant-packaged rhetoric about America being the "greatest democracy in the world," it often seems impossible to figure out exactly who controls our government. But every now and then, the public gets a fleeting glimpse into who is really running the show.

We get to see how there no longer is a boundary between Big Business and government, and how our politicians are wholly owned subsidiaries of Corporate America. We get to see, in short, exactly how our government has been the victim of a hostile takeover.

Last month, in three little-noticed stories buried in the business press, the hostile takeover was on full display. The first story was a tiny one buried on the inside pages of the Wall Street Journal about how the U.S. Treasury Department worked hand in hand with IBM to kill bipartisan pension legislation in 2003. The bill would have outlawed pension schemes employed by IBM and other big companies that give workers less than they were originally promised. The report noted that at the time, "a Treasury official disclosed nonpublic information to IBM and failed to report expenses paid by a lobbyist for a pension-industry trade group" -- all while allowing the company to circulate documents on Capitol Hill claiming the U.S. Treasury officially was working with IBM to kill the legislation. Clearly, the behavior ran afoul of the lobbying laws supposedly creating a boundary between business and government. But as the Journal went on to note, "The Justice Department didn't pursue criminal or civil charges in the matters because they didn't meet the agency's 'prosecutorial threshold.' " The legislation was ultimately killed. In effect, a major federal agency -- in this case the Treasury Department -- was the victim of the hostile takeover, serving as an arm of Corporate America, rather than a regulator.

A few weeks later, the well-respected trade publication Manufacturing & Technology News reported that the Bush administration continues to refuse to fully release a congressionally mandated report on the effects of outsourcing. Federal law required the White House to release the Commerce Department report well before the election in 2004. But the report "was delayed for clearance by the White House and the Republican-controlled Congress due to the controversial nature of the subject," the publication noted in an earlier story. Put another way, the White House and its corporate benefactors who were profiting from outsourcing didn't want to even talk about the pesky issue during the president's re-election campaign.

The only thing made public was a 12-page summary, released after the election, which "focuses on the allegedly positive impacts for the U.S. economy of the offshore outsourcing." The original report's findings from career civil service professionals was scrubbed from this shortened summary, and instead "quoted research conducted by organizations and individuals that have been funded by corporations that benefit from shifting jobs overseas." Again, a major federal agency -- in this case the Commerce Department -- was the victim of a hostile takeover.

Now, just a week ago, Business Week reported that companies are beginning to use America's bankruptcy laws not only to avoid fulfilling their pension, wage and health-care promises to workers, but to actually wholly eliminate U.S. jobs and ship them overseas. You may recall that last year, every bought-off Republican and Democrat in Washington was running around trumpeting the credit-card industry-written bankruptcy bill. They claimed that it would put an end to bankruptcy "abuse" -- but all it did was gut bankruptcy protections for individual citizens, while deliberately preserving critical loopholes for Big Business. It was the hostile takeover of Congress, whereby corporate-campaign donors convinced lawmakers to stiff their own constituents -- and then brag about it.

Not surprisingly, the corporate loopholes are being exploited. The magazine reports that Delphi CEO Robert "Steve" Miller -- the same guy trying to cut workers' pay by 40 percent while preserving executives' multimillion-dollar pay packages -- "wants to use the bankruptcy courts to drastically slash Delphi's U.S. presence, thus freeing it up to focus on its already vast overseas production." Delphi would be allowed to get out of its labor contracts, and slash its U.S. workforce by more than 70 percent -- all while preserving (and perhaps increasing) its workforce in cheap overseas labor markets. Additionally, as Business Week notes, if Miller gets his way and is able to use bankruptcy laws as a means to outsource jobs, other companies are expected to follow suit.

The fact that these examples received so little attention is no commentary on their significance. It is, instead, a commentary on how mundane the hostile takeover of our political system has become. It is no longer big news when our own elected representatives aid and abet monied interests that are trying to crush ordinary citizens. Only when we start to consider it big news -- and fight this takeover -- will we finally get a political system that starts working for the public good.

David Sirota is the author of "Hostile Takeover" (Crown Publishers, 2006).

© 2006 The San Francisco Chronicle

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